Analysing the browser battle

Analysing the browser battle

When the US Department of Justice filed an antitrust suit against Microsoft, husband-and-wife technology columnists Michelle Slatalla and Joshua Quittner found themselves at the centre of the industry's hottest story. Slatalla, who writes for The New York Times, and Quittner, who is a member of Time magazine's staff, spent 18 months reporting on Netscape Communications' Internet challenge and Microsoft's response. Their book, Speeding the Net: The inside story of Netscape and how it challenged Microsoft, came out in March. Though the couple kept their reporting neutral in the book, they formed some strong opinions about the browser battle. Shortly after the Justice Department and Microsoft submitted their witness lists, Slatalla and Quittner spoke with Leslie Goff about their unique take on the caseIDG: A lot has happened since your book came out. What do you make of all the allegations and counter-allegations?

Quittner: I think Microsoft is obviously a brilliant company, but they've overstepped here. Microsoft should have let Netscape develop but clearly was threatened by what was going on.

Microsoft was able to leverage its business to basically obliterate this company, and that's not fair. Also, I believe that being able to control the operating system gives them an unfair advantage in the software business and that it's unfair not to separate one from the other.

Slatalla: As this case drags on, Microsoft is attempting, very overtly, to cast its actions in a new light that would be favourable to it in court. It has recently released a lot of information indicating that firm plans were under way to develop a browser before Netscape was even incorporated in 1994.

But they're talking about the same discussions, retreats and meetings that everyone has known about since 1996. Only now, they've given it a new spin to show a pattern of browser development that predates Netscape's incorporation.

The facts remain the same: since 1993, a few people at Microsoft have seen the Net as an enormous market opportunity. They were casting about for ways to link the business to the emerging Internet market, and over time they managed to achieve that goal. To what extent that process was led by Microsoft studying Netscape remains to be determined in court.

Can you cite an example?

Slatalla: As the case unfolded this summer, Microsoft talked of an executive retreat in 1994 as an indication that Microsoft executives had been very clearly intent on building a browser before Netscape incorporated. Well, as early as '96, Microsoft's [public comments] about the evolution of its Internet strategy [dealt with] that retreat very differently - they said some memos were distributed and there was a general discussion of how the Net was an area to focus on. That retreat was widely reported on before, and suddenly it starts being written about in 1998 as some new revelation of some Microsoft strategy that predated Netscape.

What did you think of Netscape's recent allegation that Microsoft approached the company about divvying up the browser market in Mob-style fashion? That wasn't in your book.

Quittner: That was something in the court papers, but the people at Netscape never told us. I thought it was interesting that it came out after the fact, but in talking to Marc Andreessen and others at Netscape, no one ever mentioned that Microsoft was so crass as to divide up the market Mob-style. I went back to the company and said: "Why didn't you bring this up?" And they said, elliptically, that a lot had happened that they didn't want to discuss until they filed court papers. That struck me as odd, and I don't know what to think of it.

How surprised were you that neither side plans to call Microsoft's Steve Ballmer or Bill Gates?

Quittner: I think this case will be made or lost at the lower reaches of Microsoft. Obviously, Ballmer and Gates had a huge amount to do with the strategy, but the case turns on who knew what when, and there were some dramatic moves at the lower reaches of the company that will determine the outcome.

For example, in the book we wrote about a slideshow for Microsoft managers, and the whole tone of that meeting was, "We are going to crush this company." In a normal business, when competitors are the same size and strength, that's fine. But when you say, "We will take our operating system that is on 90 per cent of personal computers and use it to force people to take our product," that's not fair. And if Netscape can prove that such a thing happened, that will be highly unpleasant for Microsoft.

The people who side with Microsoft essentially are saying, "Let the market decide," and implying that Netscape is a crybaby. What's your take on that argument?

Slatalla: Clearly, the whole reason for the Sherman Antitrust Act was because it was the strong opinion in government that, for whatever reason, the market wasn't capable of sorting out antitrust issues. And the law remains robust today because there is a deep and abiding distrust of monopolies and of whether, left to its own devices, the market could resolve what is perceived as a monopolistic situation.

Certainly, another argument is that as we try to understand products and technologies and markets that are totally new to business and how we live our lives, maybe the old laws aren't a sufficient set of checks and balances. But I personally haven't seen any evidence of that.

What will be the outcome of the suit?

Quittner: I think this is a case that will ultimately make antitrust law for the 21st century, and I wouldn't be surprised if any number of issues will go to the Supreme Court. Then Microsoft will be in worse shape than it is now. Some of the issues Microsoft has won at the appellate level will be overturned.

I think it's clear when you look at the nitty-gritty that Microsoft used its position to create an anticompetitive climate and that, left unchallenged, it would severely stifle the software business. You can't play Bop-a-Mole with a new company.

Microsoft has said all along that it was given, in the 1995 consent decree, the ability to integrate as long as it innovated. And I think Microsoft's idea of that [innovation] will be Sun Microsystems' and Netscape's and other companies' ideas of anticompetitive practices. And the Supreme Court will have to decide.

I believe Microsoft will end up with a monopoly on the operating system but will have to unbundle the [applications] software.

What do you think all this will mean for the business user?

Slatalla: It will determine the direction that companies will go in, to what extent consumers need to be protected and given choice, and to what extent the market is gong to be left alone to make these kinds of decisions.

Quittner: The laws are generally broadly written. I don't think there's anything hugely mysterious about this. The market has already chosen the Windows operating system and Microsoft as the provider of that.

But I don't believe that they can be overthrown overnight. Even if they were, I would argue that people would continue to use Windows products for the next decade or two.

People get all riled up and say this is a matter best left to the market to decide. If you look at how the software market is set up right now, that's probably right.

But the real harm is that five years from now, Microsoft, left unchecked, will squash the market and in the process its stock will go up and innovation will go down. Or if Microsoft wises up and restructures, then you could have an outcome like the AT&T divestiture, which was good. Because of that, we have more innovation than you can shake a computer mouse at.

The software industry is something the US has created and excelled at, and if Microsoft is restructured the industry will just explode into a billion pieces, and other markets and the economy will be served - new jobs and new services and power distributed to the many instead of the few.

Will we ever know the truth about what Microsoft did in the browser wars?

Slatalla: A lot depends on whether the case goes to trial or whether it's settled.

Quittner: I think Netscape's allegations are definitely true, or enough are true. If you were in Microsoft's shoes, you'd do just what they did. That doesn't make it right.

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