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Rivals say Microsoft has not changed its ways
2007-09-14
Next week's European antitrust ruling against Microsoft Corp (Nasdaq:MSFT) is a legacy of its past behavior, but competitors say the company's current strategy is a sign of history repeating itself. Microsoft, the world's largest software maker, faces a decision on Monday from Europe's Court of First Instance on whether the European Commission was justified in ruling the desktop computer software leader abused its near monopoly to push out rivals. The ruling is the latest in a decade of antitrust cases against the company and it comes two months before the November expiration of most elements of the consent decree that settled a landmark U.S. antitrust case five years ago. That decree, under which Microsoft has been operating since, covers the company's ties to computer makers, how its software works in various categories of software and enforcement to ensure it does not repeat past practices. A new stable of competitors, who see ways to use the Internet to break Microsoft's grip on desktop computing, say the penalties from the antitrust rulings were ineffective and have not changed the company's tactics. "This is not a revelation. They are a known quantity in their business practices and ethics and their approach to industry," said Marc Benioff, chief executive of Salesforce.com (NYSE:CRM), a maker of Web-delivered business software. "If it could, Microsoft would like to stop innovation." This is an age-old criticism lobbed against Microsoft. A decade ago, it was rivals like Netscape, creators of pioneering Web browser software, and Sun Microsystems (Nasdaq:JAVA), inventor of Java software that is the primary programming alternative to Microsoft's tools, who clashed with Microsoft. Those companies have given way to new competitors like Web search leader Google Inc. (Nasdaq:GOOG - ADBE), a maker of graphic and Web design software, and Salesforce.com who are looking to circumvent Microsoft's dominance on the desktop by delivering software as "services" over the Web. Redmond, Washington-based Microsoft said it has met the requirements of its settlement with the U.S. government -- an assessment supported by the U.S. Department of Justice -- and new competitors have emerged as a result. "While there are some companies who will use the press and government processes to advance their interests and invoke their view of competition law, I think we are working quite well with most ... firms," said Dave Heiner, Microsoft deputy general counsel who leads the company's compliance efforts. He highlighted the growing ties between his company and old adversaries such as Novell Inc (Nasdaq:NOVL) in business software and with Sun Microsystems, which this week said it planned to more fully embrace Windows to run its own computers. GOOGLE VOICES CRITICISM Over the past year, Google, now Microsoft's biggest rival, has contested the software maker's move to embed its own method of searching for documents inside the latest version of Windows, known as Vista. In June, Microsoft agreed to change Vista in the operating system's next major update to make it easier for users to select other desktop search programs. Google was not satisfied and asked for the consent decree to be extended indefinitely. It argued that Microsoft's desktop search cripples competing products offered by Google, X1, Copernic, Yahoo Inc. (Nasdaq:YHOO)/span> (YHOO.O) and Ask from searching inside Vista computers. "Given Microsoft's history of aggressively minimizing the impact of court-ordered relief, it is appropriate for the court to use its authority to extend the final judgment," attorneys for Google wrote in a friend of the court filing in June to federal Judge Colleen Kollar-Kotelly. A rival who declined to be identified because they do business with Microsoft said the company is looking to wean customers away from open Web standards in favor of software optimized to run best on Microsoft servers. The new threats to industry competition are in technical battles for standards governing security, multimedia, databases and the interaction with Web servers, the competitor said. The days when Microsoft could vanquish rivals by building new features into its dominant desktop software, a practice known as "bundling," may be over, according to one analyst. "Microsoft has realized as a company that each individual product is going to have to compete and be best-of-breed, or close, or people will use something else," said Matt Rosoff, analyst at independent research firm Directions on Microsoft. Rosoff pointed to how even though Microsoft makes its own Windows Live search engine the default option for its leading Internet Explorer Web browser, it has failed to gain much ground on Google, the dominant Web search service provider.
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