As Microsoft Chairman Bill Gates was vowing to fight the April 3 decision that his company violated U.S. antitrust laws by mounting a “deliberate assault” on competition in the internet browser market, school technology personnel tried to assess the fallout from the landmark ruling.
Some school leaders thought the ruling could be a boon for educators, because it might foster competition, resulting in lower software prices. Others worried that the decision could lead to a proliferation of incompatible products. But all agreed that whatever the fallout, the judge’s decision will have a measurable impact on school technology use.
“Microsoft placed an oppressive thumb on the scale of competitive fortune, thereby effectively guaranteeing its continued dominance,” U.S. District Judge Thomas Penfield Jackson wrote in a sweeping decision that said Microsoft violated the Sherman Act, the same law used to break up monopolies from Standard Oil to AT&T.
The ruling could lead to drastic punishment, including the breakup of one of the world’s major corporations.
The judge issued his ruling April 3 after the stock market closed, but word that it was coming caused Microsoft stock to drop by more than $15 a share to around $90, costing Gates about $12.1 billion in paper losses. At press time, the stock had dropped below $80 a share.
Educators initially feared a long and drawn-out appeals and punishment process. “I would be very surprised if there is any immediate action taken. It could be months at the very least,” said Bob Moore, instructional technology director for Blue Valley School District in Kansas.
But the courts appear to have taken this concern into account, issuing a statement on April 5 setting the timeline for completing the penalties phase at 60 days.
“My transcendent objective is to get this thing before an appellate tribunal … as quickly as possible, because I don’t want to disrupt the economy or waste any more of yours or my time,” Jackson said.
Gates, the super-competitive Harvard University dropout who in 25 years built Microsoft into a multibillion-dollar empire that dominates the personal computer software market, immediately promised to appeal.
“We believe we have a strong case,” he said. “This ruling turns on its head the reality that consumers know: that our software has helped make PCs accessible and more affordable to millions of Americans.”
Jamie Morse, director of technology services for the Cambrian School District in California, agreed with Gates. “Right now, the integration [that Microsoft has] is great. And the cost can’t be beat,” he said. “Microsoft is for the masses. When it decentralizes, will it still be for the masses? I don’t know.”
Jackson’s ruling came days after settlement talks broke down between the Redmond, Wash.-based company and government lawyers, but both sides left the door open to an agreement.
Justice Department antitrust chief Joel Klein said he was willing to consider a settlement as long as it resolved the violations Jackson cited. Microsoft chief executive Steve Ballmer said the company would be open to more negotiations, but Microsoft “would need to see an appropriate openness” from the government.
Possible penalties range from breaking up the company, whose Windows operating system runs most of the world’s personal computers, to forcing it to share its software code with competitors.
School technology coordinators were divided about the potential fallout from the decision. “This is pure speculation, but I think it depends on what, exactly, the breakup is. It could be good or bad, but it will definitely change the way technology professionals do business,” said Moore.
Guilford County, N.C., distance learning coordinator Michael Parrish said, “At this point, it could really go either way. On one hand, it will be good for price structures if it fosters competition. On the other hand, it could create noncompatible products. It is already hard in a school to keep everybody on the same page.”
The lack of compatibility between several smaller software companies is of great concern to many school officials.
“It will make our jobs that much more difficult,” said Morse. “Calling for tech support will definitely be more difficult if the operating systems and software are two distinct entities. There will be a lot of ‘don’t ask us, ask them’ going on.
“The only way schools can become more accountable is through an integrated computer system,” he added. “By this, I mean desktop operating systems, network operating systems, productivity suites like Microsoft Office, and the back office program that manages everything.”
The April 3 decision affirms Jackson’s previous ruling in November that the software giant is a monopoly that illegally bullied competitors and stifled innovation, hurting consumers in the process.
The judge said Microsoft was guilty of “unlawfully tying its web browser” to Windows. But many school personnel believe this is the power behind the mega-corporation.
“The operating system is almost becoming the same as the browser these days, but this breakup would cause a division there. I mean, for example, Netscape crashes all the time. Microsoft’s Internet Explorer is just so much more stable,” said Morse. Moore agreed: “The dominant factor here is connectivity. The web is far bigger than Microsoft.”
“Microsoft mounted a deliberate assault upon entrepreneurial efforts that, left to rise or fall on their own merits, could well have enabled the introduction of competition into the market,” Jackson wrote. “Microsoft’s anticompetitive actions trammeled the competitive process through which the computer software industry generally stimulates innovation.”
Microsoft didn’t lose the entire case: Jackson ruled that the government failed to prove that Microsoft’s exclusive marketing arrangements with other companies violated federal antitrust law.
The Justice Department vowed to press the case until consumers are rewarded.
“Thanks to this ruling, consumers who have been harmed can now look forward to benefits,” Attorney General Janet Reno said.
Consumer advocate Ralph Nader said, “The judge has laid the foundation for the breakup of Microsoft. Anything less than that will be like a thundering elephant emitting the squeak of a mouse.”
However, Gates said, “As we look ahead to the appeals process, innovation will continue to be the Number 1 priority at Microsoft. It’s important to note how much the high-technology industry has changed just in the two years since this case has been filed.”
In an interview published in the Wall Street Journal before Jackson released his ruling, Gates said that regardless of what the judge decided, his company would continue to integrate the internet into its Windows software, even though that linkage was at the core of the Justice Department’s lawsuit.
Klein told reporters that Microsoft’s violations occurred after the company reached an agreement with the Justice Department in a previous case about five years ago. The government will seek a remedy that “ensures that we not have this continued pattern of antitrust violation,” he added.
Both sides in the case had reasons to seek a settlement. For Microsoft, the verdict is expected to spur more consumer lawsuits. Microsoft already faces dozens of class-action lawsuits seeking potentially billions of dollars in damages.
At least one school leader was able to keep a sense of humor about the verdict. Lowell Wolff, administrator for planning and technology at Fargo, N.D., Public Schools, joked, “If it’s anything like the AT&T break up, it means prices will go up and we’ll have people calling us at dinnertime to solicit our business.”
U.S. Department of Justice Antitrust Division