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Interview with Scott McNealy I

Microsoft innovates 'goose egg'

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Exclusive The Register interviewed Scott McNealy, CEO of Sun, at Cebit in Hannover. We asked him first about the Microsoft trial. THE REGISTER: What do you think of the Department of Justice? McNEALY: In the past hundred years they have created, I think, one of the model economies on the planet – the US economy. They've kept it competitive, they've kept it balanced, they have stayed out of the way, they have intervened when necessary in a minimalist way. For instance they did not break up IBM, but they scrutinised it. So we still have the great IBM, but we have a competitive computer industry – until Microsoft came along. I think they're going to scrutinise the heck out of Microsoft. THE REGISTER: What do you think the remedy will be? McNEALY: There are so many remedies offered. I think break-up is the wrong remedy to do up front. If it's a last resort, yes, if there are no other competitors, then break 'em up. But we're still there, Oracle's still there, Novell's still there. If you only have Ma Bell, then create Baby Bells. If you have other competitors you shouldn't be creating Baby Bells. THE REGISTER: Do you see declaring Windows to be an essential facility as part of a solution? McNEALY: You know there's lots of theory. I think the beauty of antitrust law is that it's clear enough in its goals and vague in its implementations that it will give the court the opportunity, during the remedy phase, to go evaluate all the possibilities. I could talk to you for two hours on the different possible remedies [such as] opening interfaces. My favourite is that Microsoft should not be able to buy anything. They shouldn't be allowed to buy intellectual property, they shouldn't be allowed to buy minority investments, the shouldn't be allowed to buy majority investments. They bought DOS, they bought Windows – they stole Windows, excuse me; they bought PowerPoint, they bought Word, Excel, they bought WebTV, they bought their browser technology, they bought Hotmail, they bought a billion dollars of Comcast: they bought, they bought, they bought. What have they innovated? Goose egg. Now just let's make this innovative company innovative for the next five years without buying anything. That would be the simplest remedy. I'd throw our teeny little $1.5 billion R&D budget against theirs any day, but if they're doing monopoly money acquisition, I've got a problem. So that's the simplest remedy of all, and its very easy to police: Microsoft, the only thing you can do with your cash, is invest it in R&D, or give it back to shareholders in dividends. Either way, I'm comfortable. So there's lots of remedies and I could go on and on about a whole bunch of other ones... the government did us a real favour – did all banks a real favour by not letting them buy Intuit, and Intuit is still here and we have competition, and we have banks able to go in and play in that marketplace. Microsoft was not able to blow banks out of the water by owning Intuit. I think that is a classic situation that could scale across the board. If they hadn't been able to go out and buy IE and had to develop their own browser technology, maybe they wouldn't have been able to take Netscape out. And if they weren't able to go out and buy their database technology from Sybase, or go out and buy their mail technology from Hotmail, or go out and get into the set-top box market by buying WebTV – if they had to go innovate, that is a very different game for those guys. ®

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