MS claims breakup will kill next-generation Windows project

But this time, it's possibly right

MS on Trial In an extraordinary covert filing by Microsoft in the antitrust case, the company claims that it would be too risky to develop Next Generation Windows Services if Microsoft is split into two companies.

The exact wording is: "Microsoft cannot undertake such a risky venture [developing NGWS], which will cost more in constant-dollar terms than Boeing's development of the 747 or NASA's first mission to the moon, unless Microsoft can call upon all of the company's resources in seeking to make it a success. Those resources include people and technologies on both sides of the bright line the government seeks to draw through Microsoft's tightly knit organisation." Microsoft then goes on to claim that: "Consumers will suffer if Microsoft no longer has the ability to undertake ambitious projects like Next Generation Windows Services, which (if successful) promises to transform the way in which consumers use the Internet, to the benefit of the entire economy."

This was contained in a brief entitled "Defendant Microsoft Corporation's summary response to plaintiffs' proposed final judgment" which Microsoft chose not to publish at the same time as the other five documents that we previously considered, although it was filed with the Court at the same time. The most likely explanation is that Microsoft did not want this one discussed too widely in the media, because of the wild statements in it. On the whole it adds up to being Microsoft's ranting and raving response to the DoJ proposed remedies, and it looks as though it was produced more as a cheerleaders' manual for faithful Microsoft supporters rather than for judicial purposes - but Microsoft may be numbering the judges of the Court of Appeals amongst its supporters.

But the threat to NGWS probably is real. The radical plan to evolve Windows into an all-encompassing Internet services platform is due to have some flesh put on its bones at the beginning of next month, but from what's known already it seems pretty clear NGWS will further blur, possibly even abolish, the lines between OS and app, and that much of it will fall into the judge's definition of middleware. Microsoft argues that NGWS is innovation, while the judge and the government are more likely to see it as the mother of all antitrust violations. So blocking NGWS, from the government's point of view, would be a good thing.

No meeting of minds here

Microsoft suggests that the DoJ proposal "threatens to eliminate Microsoft as an effective competitor, slowing the pace of innovation in one of America's most successful industries" and goes on to claim that "Windows is very important to the Nation's economy". Microsoft is arguably saying here that if illegal, anticompetitive (and therefore anti-consumer) behaviour some how helps the economy of the country, it should be allowed to continue unfettered. That's a rather serious suggestion. There's also what could be a joke when Microsoft says: "The government would stop Microsoft from offering price reductions on Windows", supposedly to encourage OEMs to provide support; to improve the product offerings; and to combat piracy. This is a sanitised argument for maintaining market development agreements, which were so clearly seen to be Microsoft's control mechanism for keeping OEMs in order, and maintaining its monopoly. Microsoft's pricing practice with Windows has been to put up the price of obsoleted Windows in order to strong-arm OEMs to adopt the new version, so a claim to be prevented from making price reductions is misleading.

At one point when discussing the suggestion that MS Office be ported to Linux, Microsoft wails that Linux users would resist paying for software, and that it would need considerable effort and expense to achieve it. So why did Microsoft produce IE free of charge, when it could perfectly well have priced it? As was so clear from the evidence, we know that Microsoft thought that IE could not have won against Navigator at that time.

Microsoft quotes two concepts that it claims to have invented - toolbars and clipboard functionality - and says that it was only as a result of teamwork between Windows and Office developers that these came about. We'll have more to say about this, especially as it's serious stuff and misleads the court.

Very hurt by dirty tricks claims, ahem...
It's amusing to find Microsoft saying that "The government's implicit assertion that Microsoft may take adverse action against companies that provided testimony against Microsoft in this case is unfounded and offensive" and it's puzzling to think how if OEMs were allowed to "disassemble Windows and substitute third-party software for important components of the operating system. At best, such requested relief would cause Microsoft's innovations in operating systems to grind to a halt. At worst, it would fragment Windows, destroying its value as a stable and consistent software development platform...". Using terms like "disassemble" for an OEM offering a choice of default browser, offering users other choices, and flashing the odd splash screen during booting does seem to be a trifle over-the-top.

On the intellectual property front, claiming that "What the government is asking the Court to do is order Microsoft to hand over billions of dollars of intellectual property to companies like IBM and Sun Microsystems which will use such proprietary information to gain an unwarranted competitive advantage vis--vis Microsoft" is again an attempt to mislead the Court. Microsoft has already given IBM access to the source code of Windows at its Kirkland, Washington facility where IBM does its work to extend the scalability of Windows, and deal with bugs found by its customers. As we previously reported, IBM's said its objective there is to make IBM hardware "scream with Microsoft software". It's also very hard to see what Sun could gain by poring over Windows code. It is a common Microsoft claim for the benefit of non-technical people like judges that Microsoft's crown jewels would be lost if any competitor had "unfettered access to huge amounts of Microsoft's proprietary information that they can use to clone innovative features and functionality of Microsoft's new operating systems". But Microsoft's real secrets are in its marketing plans and deals.

Microsoft also objects to the proposed requirement that Microsoft should provide access to "all interfaces and protocols" rather than what Microsoft calls "external interfaces that Microsoft publishes for use by software developers". History has shown the extent to which Microsoft applications developers had access to and used undocumented calls, and how this was exploited to get better performance and easier programming. Unless there is a blanket provision, there could be no certainty that Microsoft would not keep a few important calls out of the limelight.

Windows famine to bring industry to its knees

Microsoft says that "It would take several years and hundreds of millions of dollars for Microsoft to redesign its existing operating systems and the resulting products would be far inferior to their existing counterparts. In the meantime, Microsoft apparently would have to halt distribution of all non-compliant operating systems. That would bring the worldwide personal computer industry to its knees, causing severe economic dislocation."

Anybody with a development background will question the truth of the assertion that a "far inferior" product would normally result, or that the PC industry would really be crippled. What is true though is that "Microsoft spends large sums of money each year providing product support to its customers. Given the complex interaction of hardware and software products on even the most basic personal computer, it is often difficult to ascertain what is causing the particular problem a customer is experiencing. A substantial amount of time is thus spent on product support calls determining the configuration of the customer's machine in an effort to isolate the source of the problem." It's called bug fixing, and the bugs and design flaws do create serious problems every day. In most cases it is not an esoteric combination of hardware that exposes the problem, but quite simply poorly-designed, inadequately-tested code.

Understandably, Microsoft does not like the provision that it would have to keep operating systems available for three years. Most smaller companies would prefer to use one operating system to keep support costs down, and the requirement merely helps customers but does not further enrich Microsoft prematurely by forcing upgrades earlier than otherwise desirable if an OS is withdrawn.

It is not surprising that Microsoft is none too happy that it would have to keep its emails for four years, and that this would be "burdensome". After all, any ethical company would have nothing to worry about, and the storage requirement even for "tens of millions of emails" is trivial.

Microsoft expressed its concern that "Our system of laws does not merely tolerate Microsoft's desire to proclaim its innocence in this respect; it enshrines the company's right to do so. No act challenged in this case was malum in se [bad in itself]; none involved an allegation of moral turpitude..." That's a value judgement about which there will be more than one opinion. In years to come, Microsoft will be judged by the maturity of its response to its self-inflicted wounds. On the showing in this filing, the analysis by future legal scholars (as distinct from paid lackeys) is unlikely to be favourable. ®

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