Off With Slap on the Wrist, Gates Promises to Play Nice

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Maybe the U.S. Congress should just declare Microsoft Corp. a legal monopoly. Microsoft, which Chairman Bill Gates co-founded in 1975, always has acted as if it were immune to the law and the last decade has proved it was.

Twice, the U.S. government has sued to curb the computer software company whose Windows operating system now is used on 95 percent of the world’s personal computers. Twice supposed American trustbusters have agreed to settlements that left the tenacious, unrepentant Microsoft as potent as ever.

The second capitulation came Nov. 2 when Microsoft agreed to a series of non-restrictions that will change nothing in the PC business. The government came to terms despite a U.S. Court of Appeals ruling this year that the company had abused its power as the leading PC software company bullying customers and competitors alike.

If this settlement is approved by U.S. District Judge Colleen Kollar-Kotelly, Microsoft doesn’t even have to pay a penalty for having been found guilty. So much for all the talk the past few years about breaking up Microsoft into two companies, one to sell Windows, the other to sell programs that run on Windows.

Microsoft doesn’t even have to admit it did anything wrong. After the settlement was announced both Gates and Microsoft Chief Executive Steve Ballmer said they would try harder to get along with other companies in the industry an impossible-to-believe act of humility.


True colors

The company was still arrogant enough a week after the settlement to join a group of companies asking Congress to cut taxes on foreign profits using the excuse that this would increase their spending in the recession-bound U.S.

Nine of the 18 states that had joined the federal government’s case against the software giant are seeking tougher measures. Judge Kollar-Kotelly has scheduled a hearing on their plea for March. But why bother?

All PC manufacturers except Apple Computer Inc., which has its own operating system, need Windows and won’t do anything to upset their sole supplier. So what if the proposed settlement would allow PC-makers to omit icons for Microsoft applications on their entry screens in order to highlight rivals’ programs? So what if Microsoft has to reveal the code for allowing other programs to run on Windows?

The biggest joke is that a three-person committee is supposed to oversee Microsoft’s compliance with the settlement. Those folks would be snugly settled in Microsoft’s Redmond, Wash. headquarters and would more likely be co-opted by the company than keep it in line.

Perhaps the U.S. government down deep has too much respect for the country’s business heroes. It approved the proposed takeover of Honeywell International Inc. by General Electric Co., run by the now retired Jack Welch. The European Commission stopped the deal. Now the EC has accused Bill Gates’s company of dominating the market for software that runs servers, the computers that run networks. Microsoft could be fined as much as $2.5 billion.

The U.S. would never think of being that tough. It should just acknowledge that suing Microsoft ever again would be legal eyewash and a waste of time and money. Making Microsoft a legal monopoly is out of the question, of course. We all know that only Major League Baseball, which has had antitrust immunity since 1922, deserves such a status.

Still, it’s time Sun Microsystems Inc., AOL Time Warner Inc. and other competitors accepted that Microsoft will remain untouched and figure out how to exist in that environment. Maybe if the government said openly that it just couldn’t do anything about Microsoft, Gates and company would relax, get a little fat and lose market share through their own neglect.

David Pauly is a columnist for Bloomberg News.

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