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Customers shrug off Microsoft ruling

April 3, 2000
Web posted at: 9:43 p.m. EDT (0143 GMT)

Though Microsoft took a financial beating after Monday's antitrust ruling, many of the company's largest customers seemed to shrug off the findings of a federal judge who branded Microsoft an illegal monopoly.

For those enterprise customers, it is hardly a new thing that the company may spend much of its time scrimmaging a lawsuit rather than developing new technology. The only difference now is that Microsoft will sink a lot of effort into a judicial appeals process, which could drag the case out for years.

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That process "will no doubt tend to tie up executive management, but Microsoft is a very large and capable company. I don't think the rest of [its] business is going to grind to a halt," said Andrew Weiss, chief technology officer at Merant International, an enterprise application development company in Rockville, Maryland.

Michael Gartenberg, an analyst at Gartner Group, in Stamford, Connecticut, agreed.

"The case is a distraction Microsoft would rather not have, they'd much rather concentrate on business," Gartenberg said. "But, frankly, they've been embroiled in this for two years and still have managed to ship Windows 2000 and get the Pocket PC ready to go. And they couldn't have done that any faster even if they hadn't been tied up in this case."

While not drawing immediate backlash from its enterprise customer base, the company did not fare so well on Wall Street. Microsoft fell $15.56 1/4 to $90.68 3/4 per share in late trading, as the company appeared poised for harsh penalties in the government's antitrust case.

Shortly after markets closed, U.S. District Judge Thomas Penfield Jackson delivered that ruling, handing out his conclusions of law and ruling that Microsoft violated federal antitrust laws.

The ruling dovetails with Jackson's November findings of fact in which he labeled Microsoft a monopoly. Jackson hit the company specifically for use of its Windows operating system dominance to quash competition in other areas -- particularly the Internet browser market.

Still, many Microsoft customers believe some good can come from the penalties that Microsoft will face or from a potential settlement of the case, which still could come about.

"The pending case has potentially a very significant impact on my business for all the obvious reasons," said Eric Kuzmack, lead analyst at Gannett, in Silver Spring, Maryland, and a member of InfoWorld's Corporate Advisory Board (CAB).

"Obviously, any change in licensing that makes it easier to understand and manage would be welcome," Kuzmack said. "We find that their licensing agreements require a team of Ph.Ds just to figure out how to legally open the shrink-wrap."

Microsoft might also walk away from its tough fight with the government with some better business practices, added Geoff Wells, vice president of Information Technology at the ABC Broadcasting Group, in Burbank, California.

"I could see it having a marked increase in the number of vendors offering add-in products, and also making licensing complicated -- but possibly more competitive," said Wells, who also is an InfoWorld CAB member.

One IT manager cringed at the notion that as Microsoft's legal expenses rise, so might its prices.

"They will pass the expense of appeals along to consumers. It will be just a matter of how much," said Charles Carpenter, IS Director for the Four Seasons Hotel in Lost Angeles.

Richard Friesen, president of San Francisco-based ePit, a high-availability engine for business-to-business exchanges, said market interference such as the antitrust suit often leads to long-term costs and unintended consequences.

"Where business people make decisions based on legal rulings rather customer needs it costs us all," Friesen said.

Microsoft Chairman Bill Gates attempted to quell such concerns at a news conference shortly after the ruling was released. Gates said that while Microsoft's legal team will focus on the case and an appeal, the rest of the company is "committed to continue to hire great people, listen to customers, invest in future research and development, and create the next great generation of software."

Critics of the software giant touted Jackson's ruling as proof that Microsoft cares about little else than turning a profit and dominating the software world.

Consumer advocate Ralph Nader urged the DOJ and states to break up the company, and force it to "divest itself of the browser -- the software product that led to the antitrust case." Other remedies Nader suggested include ensuring that Microsoft's Office desktop applications suite is compatible with at least two non-Windows platforms; requiring that Windows source code be opened up to competitors; and preventing Microsoft from "penalizing" OEMs who carry non-Microsoft software.

"Microsoft doesn't respect the antitrust laws, and it has amply demonstrated that it can't be trusted," Nader said. "The company has shown its contempt for any court-imposed changes in its conduct. If the government ends the antitrust case by seeking changes in its conduct, but not in its structure, Microsoft can be expected to creatively evade the thrust of such agreements."

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