[iwar] [fc:MS.antitrust.deal.close.-.WinXP,.bundling.to.emerge.unscathed?]

From: Fred Cohen (fc@all.net)
Date: 2001-11-01 08:26:06

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From: Fred Cohen <fc@all.net>
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Date: Thu, 1 Nov 2001 08:26:06 -0800 (PST)
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Subject: [iwar] [fc:MS.antitrust.deal.close.-.WinXP,.bundling.to.emerge.unscathed?]
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MS antitrust deal close - WinXP, bundling to emerge unscathed?

By John Lettice

Posted: 01/11/2001 at 11:59 GMT

Microsoft and the DoJ seem close to cutting a deal, and from the sound of
the terms leaking from the settlement talks, the Beast stands a good chance
of emerging relatively unscathed. That is, if the States attorneys general
can be persuaded to go along with it.

It's possible that the full deal being proposed is tougher than the elements
that have got out imply, but from what we know so far it seems likely that
the actual toughness of the settlement will depend on interpretation, and
how rigorously it's enforced. After the DoJ effectively fell asleep during
the negotiation of the last deal, Microsoft was able to insert wording that
later allowed it to get away with bundling IE, and it's perfectly possible
that something similar is happening again today.

The terms themselves seem to have leaked after being presented at a meeting
between the DoJ and the attorneys general yesterday. They take the form of a
five year consent decree with a possible two year extension if Microsoft is
deemed to have violated the terms, and there is to be an independent three
person panel of experts to monitor enforcement. But it is the nature of the
decree's content that is important, rather than the headline 'five year
sentence.' 

Microsoft appears to have conceded on differential pricing and restrictive
contracts, so depending on how this is implemented it ought to be more
difficult for the company to make it financially attractive for its special
friends in the PC business to do its bidding. But although this might have
been helpful a few years back when there was some sort of competition,
Microsoft position is now so dominant that it's doubtful that this
concession will make the slightest difference. And if the campaign against
"naked PCs" being waged under the anti-piracy banner continues, it will
still be extremely difficult to buy PCs that don't come with Microsoft
software on them, and the 'Redmond tax' will therefore still be levied on
practically everything that goes out the door.

Set against this apparently now minor concession, Microsoft seems to have
successfully moved XP out of the firing line. Its integration of IE and
Windows Media Player into the OS does not seem to have been objected to.
Future integration will also be possible for the company, but this could be
muted a little by Microsoft having to offer PC companies the ability to
choose a version of the product that doesn't have these new products built
in. The most obvious thing about this part of the deal is how fuzzy it is;
if the leaks are correct that XP is unscathed, then Microsoft can happily
continue its current incursions into the digital media market unchallenged.

And although being forced not to impose 100 per cent integration in its
future excursions into bundling may well be helpful in the future, XP
already is the mother of all bundles - there's quite enough in there to keep
Microsoft busy for a couple more years.

The final part of the deal to have made it into the public domain concerns
access to Microsoft code. Rather than going for any of the more drastic
solutions such as forcing Microsoft to license Windows or to make source
code public, the DoJ appears to be settling for a much more limited option.
Qualified personnel from software and hardware companies would be allowed to
inspect Microsoft code in some form of secure facility - you may well wonder
what the blazes that's supposed to mean.

It's not as yet clear who would be deemed to be qualified, and who would
have the final say-so on their access. Nor is it obvious that this kind of
arrangement differs massively from the existing source access deals
Microsoft has with some of its major customers, and some hardware suppliers.
We can be pretty sure that Sun, which most certainly could not achieve such
access at the moment, will be in there inspecting, shouting and screaming if
this part of the deal goes ahead, but we can't be entirely sure how helpful
these insepction rights will be, if at all.

So is that it? Maybe, maybe not. From what we know so far, the deal looks to
have the potential to be spectacularly toothless; if there's something else
yet to be disclosed that could change this, it'll have to be big. It also
seems highly unlikely that the States, who've adopted a more hawkish
attitude than the DoJ, will accept it. So it looks close, but maybe not as
close as it looks... Ž

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