Structural remedies: splitting Microsoft up

intro

Structural remedies can involve the breaking of the company into two or more separate companies, either vertically by product group, or horizontally by creating in effect Babysofts that compete with each other and start with identical products. Structural remedies are attractive because they do not require supervision by a court, but many Americans would resist any attempt to break up what they regard as a national treasure, and there's a real danger that this kind of measure might destroy the company. Plus, there are sound arguments that break-up in either of these ways would not be in the interests of users. A vertical split would merely create smaller monopolies, and not address the core problem of lessening barriers to entry. Breaking Microsoft into Babysofts would probably result in the fragmentation of  Windows. Whether we like it or not, Windows is a fact of life, and those who suffer are entitled to see an improvement, not a worsening of the situation. The only structural remedy that could work is total divestment, but this very likely to be politically unacceptable in the USA. Microsoft could be divided into quite a few parts, and then auctioned. There would need to be some safeguards, such as only allowing a company to hold one of the parts. General problems with remedies Because of the time that it is likely to take the Supreme Court to decide an appeal - and reports that this could happen by the end of this year are ill-informed - technological evolution may well prove to be a more effective determinant than any imposed remedy, although a glance at history shows that technological change is not that fast, other than for relatively few early adopters. The unmemorably-named Next Generation Windows Services may get the direction of a technology shift wrong, but further judgement on this will have to await for some harder data, promised for the Spring, but probably next month when Microsoft has a strategy day. Remedies need to be put into effect quickly: as Judge Jackson observed on Tuesday, the economy is being damaged by the present situation, so the matter should be settled as quickly as possible. Of course, when Microsoft really has its back to the wall, it may just agree terms for a settlement, but as the possible remedies get fleshed out and the consequences are fully realised, this is less likely unless a shareholder revolt forces this on the board. It is also possible that Microsoft would itself decide to split itself into separate companies while the courts are deliberating, which could create a complex legal situation. ® Back to previous part Back to first page Additional Information: Recording of first Appraising Microsoft Conference Day 1 Recording of first Appraising Microsoft Conference Day 2 Transcript of second conference

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