Microsoft

Are all the lawsuits and newsgroup flames against Microsoft legitimate?

Every person views Microsoft in different ways, depending on past experiences and current knowledge. I don't claim to know everything or have the ultimate objective viewpoint.  As a former Microsoft employee with several years experience in the industry outside of Microsoft, including at least one competing company, I believe I have a fairly broad perspective that I would like to share.  I have worked with people from all camps, and intense discussions, both face to face and online, as well as all the media coverage, have made me ponder these matters. 

In this document, I will discuss how I view Microsoft's general disposition to the outside world, the claims about Microsoft copying technologies, the Chinese Wall, what I believe are it's strengths that made it so successful, and the anti-trust case .  Please bear in mind that I'm a software developer, and have very little insight into the legal world.  I'm writing this mostly from a technological perspective, partly with a business perspective.  At the end, I provide some links to various sites about Microsoft, both political and technological in nature.  If you wish to comment on any of this, feel free to do so .

General Disposition

Microsoft is very aggressive, no doubt about it.  That's how pragmatic shareholders should want their company to be.  This aggressiveness has carried on to all aspects of their business, not just in the sales, marketing, pursuit of technology, and customer satisfaction, but also in their business relationships.  Microsoft is often found to pursue contracts with their partners to their own ultimate benefit, taking advantage of the letter of written contracts and on a couple of occasions, there have been contention about the contents of verbal agreements.  There are several cases where potential or real partners have felt that Microsoft ignored the intent of a contract or relationship, if not the written meaning.  Is this legal?  Yes.  Is it moral?   That depends on whom you ask.  Does it give Microsoft a reputation of being a nice, ethical business partner?  No.

3Com and Stacker are two fairly prominent examples of companies with tumultous relations with Microsoft.  The Stacker suit in particular is fairly interesting, because Microsoft was convicted of stealing technology from them, which leads me to the next point.  But first, I'd like to make a few comments on the Stacker suit.  This is a clear example of what I have been trying to describe.  Even though Microsoft was convicted in this case, I'm not sure that Microsoft copied code verbatim from Stacker.  There were some claims that appeared to originate deep in the Windows group, and I know the professional pride and skill of the Windows engineers:  They would not make such claims if there wasn't something to it.  Perhaps they had seen the Stacker algorithms, were somehow inspired and came up with something else that they felt was better.  Perhaps they found some other compression algorithms independently.  I don't really know, but I still think that Microsoft deserved to lose the case.  After all, the relationship with Stacker was at a pretty advanced stage at the point when the companies broke the connection.  Code had been shared, a common strategy had been more or less agreed upon, and it was fairly clear, at least from a technological standpoint, what both companies was going to get from it.  I think that even if Microsoft had made up a set of compression algorithms that were entirely their own, they should have honored the agreement with Stacker to a point that the latter company would have felt ok about what they got from the deal.  Maybe the Microsoft engineers thought they had invented or found something better that they preferred to use, but it doesn't really matter:  When the two companies decided to exchange code, Stacker had, for all intents and purposes, already sold the code to Microsoft and Microsoft should have held down their part of the bargain.

Microsoft: Innovator or Technology Thief?

In a shockingly large number of press articles, you will find elusions to Microsoft stealing technology rather than inventing their own.  For instance, venture capitalists are often quoted as saying that they won't send wizz-kids from their companies up to Redmond because they supposedly get sapped of ideas when there.  Appearently, nobody stops to ask the critical question how we know that these wizz-kids have any ideas that are relevant to Microsoft.  A venture capitalist will have a natural tendency to be on the side of the companies they invest in, and the technologies that reside there.  Rejection of such technologies is, by extension, a rejection of the venture capitalist.  When the technological evangelist comes back from Redmond and says that Microsoft weren't interested, the venture capitalist will naturally try to find explanations that does not point to the technology involved being worthless.  Of course, Microsoft not being interested does not make the technology worthless, just not relevant to the Microsoft strategy, but this might be a subtle point to realize in the face of rejection.

Another reference I find to the image of Microsoft being the technology copycat are all the lawsuits.  It seems that many people think that Microsoft must be guilty of something when they get sued so much.  This is an interesting conclusion, since everyone knows that an important part of a lawsuit strategy is to find somebody with lots of money to sue.  Since Microsoft meets this criteria better than anyone else, they must neccessarily face a lot of lawsuits, even if they always behaved like an angel.  The best example of  this is the totally bogus Bristol lawsuit, which were described by some jurors after the case as The "sue Microsoft for money" business plan.  (See Wired article).  Fortunately, Bristol lost the suit.  The Caldera case is very similar, in my opinion.  Another curiosity about this claim is that Microsoft doesn't lose more of the lawsuits:  It seems to me only a small minority carries through to conviction. The Stacker suit is really the only truly successful lawsuit against Microsoft so far.  For instance, the Wang suit was settled out of court with Microsoft buying a certain portion of Wang stock - ie, not a unilateral exchange of assets.  Today, the two companies are sharing some kind of relationship with Windows 95/98 shipping with Wang imaging software.  OLE, one part of the lawsuit that I have seen referenced a lot, was not mentioned in the settlement.

A long list of highly effective products or technologies lends itself to signify Microsofts technical prowess:  COM/DCOM, OLE, MTS, Developer Studio, SQL Server - or the whole BackOffice suite and the DNA architechture, JVM, Windows.  While I would agree that Microsoft did not neccessarily invent the concepts behind all of these technologies, the company has distinguished itself by developing either the best performing, the most effecient or the most useful version.  For instance, Microsoft certainly didn't invent component based development, but COM is by far the most commercially successful product in this category, is generally recognized as the better implementation, and furthermore, Microsoft is the first major company that envisioned the importance of component based development - rather wisely, I might add.  While certain versions of Windows are not that impressive from a technological perspective, and Microsoft did not invent graphical user interfaces, the first versions of Windows had to use very sophisticated memory management to run on the limited hardware available on the Intel platform at the time.  Also, no other operating system has versions that is able to run on anything from a palmtop computer to a dual-processor minicomputer.  As a last example, and perhaps the most ironic, consider that Microsoft developed a Java Virtual Machine that is much faster than the one Sun was able to produce - or everyone else, for that matter.

Consider also the various industries in which Microsoft was far ahead of most other major software companies.  Microsoft produced multimedia applications long before "Multimedia PC's" were ubiquitous, back when multimedia was considered a fringe.  When multimedia did become popular, Microsoft had several important titles and a lot of experience in that field.  Microsoft built connectivity into Windows and pushed it's LAN software long before most people realized that computers are strong as communication tools as much as data handling tools.  Microsoft experienced with tiny operating systems long before PDAs became popular and "Internet Appliance" (which really should be "Information Appliance") became a buzzword.  Microsoft has poured hundreds of millions of dollars into research on interactive TV and speech recognition, to take a couple of prominent examples.  In all these cases, Microsoft has been several years ahead of the industry, so there should be no surprise when they end up being the dominant player in at least some of them.

Microsoft's Strengths

I often hear the claim that Microsoft was successful only because it got the DOS deal with IBM.  I find this a highly curious assumption, since there is a long list of appearent and relevant strengths to the company.  It is also obviously not true, since Microsoft was highly successful both before they made the deal with IBM and after the two companies broke up over the OS strategy in the early nineties.  Growing consistently at a 15-20% annual rate over 25 years requires more than one lucky break, and Microsoft critics should learn to live with it if they wish to be taken seriously.

So what does make Microsoft so successful?  A lot of people have tried to answer that question with a short explanation.  I don't purport to have the formula, but I can point to some very strong advantages that Microsoft possesses.

One of the first things must be the people.  The aggressiveness that I eluded to earlier is also prevalent in the hiring strategy.  I would say this is one of the most consistent and valuable strengths to the company.  A lot of the other things the company is good at - marketing, for instance - is something it learned along the way, but the principle that only the best and brightest people would work for the company was applied from the beginning.  Vigorous interview practices were employed even at the early stages, and the company has never been shy of laying off non-performers.  Positions are not filled with 'the most qualified candidate', they are filled with the first candidate that is truly qualified, no matter how long it takes.  Since criteria are often tough, this can sometimes take a while.  This policy does not create contention between the company and the employees.  On the contrary, knowing that all your co-workers are going to be as professional and dynamic as yourself is a very motivating factor.  You never have to pick up the slack for anyone.  The synergy that happens when everybody on a team delivers at or above targets often offset the understaffing problems that the tough hiring criteria frequently yields.

Another strength I would highlight in detail is developer relations.  Microsoft critics often cite the many Windows applications for that platforms success.  True enough, but it is a mistake to think that this is an accident.  Perhaps Microsoft is so strong at developer relations because it started out as a language company, perhaps it just realizes how crucial it is -- at any rate, it is something that adds a lot to the success of many of the Microsoft products.  For instance, there are a lot of reasons why Word won the position as leading word processor, but recruiting third-party development was definitely a factor.  It was an integral part of the strategy to let programmers write vertical applications on top of the early Office products -- most notably Excel and Word.  The strategy worked:  Large corporations appreciated being able to customize the applications for their specific needs, and this created an investment on their part that committed them as loyal customers.  Also, companies such as Alki and WesTech started to create third-party tools that ran on top of the Office applications.  The section " Chinese Wall" below also discusses this aspect of the Microsoft strategy.

There is a long list of other strengths that contribute to Microsofts success.  A few examples:  Effeciency - Microsoft has long been known to produce both the intellectual and physical aspects of their products with impressively few resources.  Market Perception - Microsoft has an uncanny ability to deliver a product that very accurately fits the market needs.  Growth Management - the company grew from $2bln in revenue and 20,000 employees to $15bln and 30,000 employees; a lot of companies would envy such strong growth management.  Agility - despite the size of the company, reorganizations are common and are carried out with virtually no loss in productivity (I've gone through a few myself, and been in much smaller companies where restructuring were more pain to the organization than was ever the case at Microsoft). 

Chinese Wall

Many people, in the computer and in the legal industry, complain that Microsoft enjoys an unfair advantage from developing both the operating system and productivity applications.  In response, Microsoft contends that there is a Chinese Wall that separates Windows/System developers from the Application developers.  I can neither confirm nor refute the existence of this virtual wall.  I can, however, as someone who has been developing Windows applications for Microsoft for years, say that if the company enjoys an advantage from this situation, it is extremely marginal - and it may be offset by another by-product of developing the system which I will get to in a minute. 

As any large technological company, Microsoft uses electronic communication a lot.  Email and newsgroups is probably used more than face-to-face direct communication.  On some of the developer newsgroups, we had a few very knowledgable Windows developers answering questions.  More often than not, these guys were simply experienced Windows developers and they certainly never offered information about the insides of the systems we were developing for.  In this way, the advantage Microsoft may have enjoyed from the systems group were no more beneficial than the extra knowledge any large Windows product company might achieve through internal synergy and accumulated knowledge.

Microsoft has often been accused of 'hiding' calls in Windows that developers would only reveal to inside people.  In fact, if anything the reverse is true.  The few times I did see an email or newsgroup posting from a Windows developer, more often than not, it would be to discourage the use of such calls.  Microsoft programmers are just as curious as the rest of the industry, and sometimes, someone would post something about an undisclosed call that they had found - but someone else, and often a Windows developer or program manager, would say something along the lines don't use this call, it might change in the future .  I, for one, often took this advice seriously and simply refrained from using undocumented calls.  When these API calls would then be documented in a Dr. Dobbs journal issue or a book or something, everyone else in the industry would be all over it while Microsoft had been trying to avoid using it.  The Windows group would then be stuck having to support these calls, since backwards compatibility is Microsofts policy.  I suppose there are companies who has a very slight edge over their competitors in performance or power, for whom it is worth it to invest research in finding these calls and using them, even though they know that doing so would sacrifice compatibility, both forwards and backwards.  When Microsoft then removes support for these calls (aforementioned policy notwithstanding - it does happen) and thereby breaks these products, those companies should not come crying 'foul'.  They frequently do, however.  It's possible to argue endlessly about the wisdom in having undocument/unsupported calls in the system, but it's clearly indicated in the documentation which calls are going to be supported in the future, and the products that follow these recommendations rarely if ever have any problems.

Microsoft does more than any of its competitors on the system side to document and support the writing of products for Windows - or any other of its platforms.  (See my note on developer relations, above).  Microsoft makes all documentation for any kind of development available free on the internet.  The MSDN (Microsoft Developers Network) is the best developer relations group I have ever come across, head and shoulders above any other commercial development support group (see also the MSDN ISV site).  There is a free newsgroup service that allows Windows developers to freely exchange information and tips (the newsgroup server is msnews.microsoft.com).  Microsoft conducts many free seminars and training events with highly knowledgeable speakers.  The Microsoft Systems Journal is a non-profit publication with a wealth of information on Windows development.  The Microsoft Solutions Framework is Microsofts consulting services way of making Microsoft development strategies available to other companies.  Microsoft TechNet is a way for a company to keep up with all system software releases, if maintaining compatibility is an issue.  There is also the MVP program.  In addtion, Microsoft spends millions of dollars every year on developer tradeshows.  All the information, support, tips, tricks, examples, articles, knowledge-base records, and software that Microsoft makes available to developers flies in the face of the claim that Microsoft is trying to impede outside development with dirty tricks. 

To further illustrate the unfairness of this kind of criticism, consider history.  Microsoft came out with Windows 1.0 in the mid eighties, and tried hard, from the very beginning, to get other companies to write software for Windows.  It ported it's own applications over, and lobbied extensively to get more people to port their products, either from DOS or the MacIntosh, and later from OS/2.  Few did, until Windows 3.0 came out in 1990.  This became a big success, and later, Microsoft was accused of writing their own apps for Windows before other companies had a chance to port their applications.  This is just sheer baloney:  These companies had a 5 year span in which to rewrite their applications.  The fact that they chose not to do so does not reflect anything unfair upon Microsoft.  This chain of events illustrates more than anything else that Microsoft is "damned if they do, damned if they don't", in critics eyes anyway.

Antitrust Case

The antitrust case against Microsoft is a big case of taxpayer waste, and possibly even worse as it may turn out to hurt the industry through over-regulation (in case Microsoft does not prevail).  Brian Arthurs clumsy theories about network effects, which provides an important foundation for the government case, have been severely debunked.  Microsoft is not a monopoly, which is one of the most fundamental aspects of the case, and one that the government have had the hardest time proving in court.  Microsoft does not overcharge for products, Microsoft does not harm consumers, Microsoft does not kill innovation.  I don't know what 'unfair business practices' or 'anti-competive behaviour' is, but Microsoft is obviously highly competetive, and markets or industries do not operate by 'fair' means according to the egalitarian standards that antitrust proponents seem to advocate, nor should they.

I may or may not be able to prove all these assertions.  What is often overlooked by the observers is that ideally, Microsoft should be considered innocent until proven otherwise.  The debate, whether conducted in the media or on private forums, chat rooms or newsgroups, carries strong indications that Microsoft must be guilty of something, and it is up to antitrust opponents or Microsoft to prove otherwise.  This to me is a curious and deeply disturbing trend.  After more than a year of public scrutiny, government persecution and intense private discussions, I have yet to see a single proof for any of these things:  That Microsoft is a monopoly, that Microsoft charges too much for any one of it's products, or that it won a market leadership position with an inferior product in just any one single case, or that any one consumer has been stuck paying for a Microsoft product he or she didn't want.  In fact, when it comes to prices and quality, whenever someone examines the emperical data closely, it always turns out that competition from Microsoft leads prices to decline (whether Microsoft is the market leader or not), and that the best product wins out in the given market niche. 

Somebody might argue that Microsoft is not a person, that the constitution should not apply, and that the government should take action against Microsoft even if there is only a suspicion of harm.  While the first two may be true, I challenge the latter on the observation that government action against companies or industries have invariably led to harm to the economy and therefore consumers, and that the wiser choice would be to start from the assumption that government action will cause more damage than benefits.  From there, proponents of government intervention should have to prove conclusively whatever claims they make.  Since conclusive proof is a far cry from whatever drama the DOJ has conducted in court, a wise judge would let Microsoft go.

The anti-trust case is nothing but a political agenda being pursued by powermongers.  California has more electoral votes than Washington, and Sun, Oracle, Netscape, Novell and AOL combined have far more political pull on Capitol Hill than Microsoft alone.  Theatrical elements and charismatic lawyers aside, the government has not built a solid case against Microsoft.  Some internal email may have drawn a portrait of a very dramatic, intensely competitive company.  So what?  Being highly competitive is the opposite of what the government claims Microsoft is.  I am genuinely puzzled why internal emails and memos is even admitted as evidence in the trial, since it's technically legal to plan pretty much anything - you can only violate the law through actions.  Everybody muses about Gates stalling in the video deposition, but nobody focuses on the ridiculousness in Klein's lawyer asking Microsoft's leader the meaning of the words 'piss on'.  Everybody talks about Allchin's bungled video demonstration, but nobody talks about the successful run completed that same evening with the judge, government representatives and members of the media present. 

Microsoft has pulled the short straw in this trial from the beginning.  Not only is it victim of political maneuvering, it also gets penalized through procedure:  The DOJ has had twice as long to prepare for the case and was allowed to change direction mid-trial.  The arbitrary 12-witness limit hurts the defense more than the offense - it has prevented the defendant from painting a clear picture to the court about what really is going on in the industry.  Microsoft has not been allowed to cross-examine government witnesses that testified through affidavits.  Also, given the decision pattern so far, the DOJ seems to be blessed with a sympathetic judge.

If you are an American tax payer, you should be deeply concerned with this squandering away of your money to pursue political agendas.

Links

I have listed the links in four categories:  Pro-Microsoft - mostly sites that speaks against the antitrust case.  Anti-Microsoft - mostly sites that advocates legislative or legal action against Microsoft.  Product sites - reviews on selected Microsoft products.  News sources - a lot of online magazines have specific coverage on the case.  If you want to recommend another site to add to the list, please let me know .

Pro-Microsoft These sites or articles speak against the Microsoft anti-trust case
Association for Competetive Technology	A short page press release.
Mises Institute on Microsoft	Ludwig von Mises index of articles and essays.
Netizens for the Freedom to Innovate	Grassroots page.
Moral Defense of Microsoft	Committee for the Moral Defense of Microsoft
Liebowitz Homepage	Economist Stan Liebowitz home page.  The one site I've found with the most actual data.  Several articles puts a much different light on the lock-in theories as proposed by Arthur by examining the market itself.
KAZ' comments	Private home page comments, much like this one.
Ludwig von Mises Institute	Various comments from political and economical observers; choose the 'pile on Microsoft' link.
Cato Institute	2-page commentary.
Reason Magazine	Commentary that speaks generally against antitrust ("The New Trustbusters").
The Freeman	Short commentary from "The Foundation for Economic Education".
Computerworld	Short article arguing against making the trial personal ("Don't Put Gates on Trial").
Red Herring	Red Herring - several pages long.
Forbes Commentary	Not too insightful, but correct on the Reno criticism.
Slade Gorton	Republican Senator Slade Gorton's speech on the Senate Floor.
Components Online	Perspective from a technical site.
Freemarket.net Forum	Discussion forum where most participants are against antitrust.

Microsoft Product Information These are some product reviews, comparisons and commentaries - if you read these, you will quickly realize that Microsoft builds great products. My focus in the selection was to get a fairly broad product coverage.
MTS: Fast Train Coming	A business review of Microsoft Transaction Server.
'Confused' App Server Market	InfoWorld Article saying Microsoft Transaction Server as the most popular application server at 46%.
CORBA No Match for DCOM	ComputerWorld article quoting and Ovum report that compares Microsoft's DCOM favorably to CORBA.
SMS vs. ZEN	A long and technical article with real-world examples showing that Microsoft's SMS is better than Novell's ZEN.
DCOM vs. CORBA	Network Computing's review of DCOM vs. 5 flavors of CORBA, where DCOM comes out way ahead.
NT Firewalls Tough Enough	DataCOMMs lab test of NT Firewalls.  NT gets a lot of heat for not being as secure as Unix, but DataComms lab test led to the opposite conclusion.
CRN Test Center: IIS	CRN compared IIS with NetScape Enterprise server, O'Reilly's and Apache. IIS got the Editors Choice award.
Unisys Press Release	Unisys announcing main-frame level reliability on NT. Other HW companies, such as HP and Compaq, offers highly reliable NT machines.
CNET Suite Comparison	Microsofts Office 97 won CNET's comparison review against corresponding Corel and Lotus suites.
Flight Simulator	A very detailed, technical and balanced review of Flight Simulator 2000 by a commercial pilot.
Visual Studio	Even the notoriously anti Microsoft ZDNet cannot get around Visual Studio's good points.

News Sources
Wired	Wired's coverage has a slight anti-Microsoft bias, but is one of the more balanced news sources on the subject.
The Economist	I have always appreciated The Economist as a magazine.  While they have published several articles questioning the value of antitrust, their editorials seem to advocate some mild antitrust remedies against Microsoft.
Forbes	'Half Time Scorecard'
Antitrust.org	Lots of great information about antitrust.
NY Times	Registration required.