In a brief submitted to federal court, state antitrust regulators dismissed companies such as Google and Mozilla, and technologies such as Ajax and software-as-a-service, as piddling players that pose no threat to Microsoft’s monopoly in the operating system and browser markets. Ten states and the District of Columbia made the unusual claim to try to show that the OS and browser spaces had changed much more slowly than expected in 2002, when state regulators and the U.S. Department of Justice (DOJ) brokered a deal with Microsoft in a long-running antitrust case against the Redmond, Wash. company. The lack of change, they said, means that potential competitors need more time — and judicial protection — if they are to develop into real rivals to Microsoft.
“The relevant markets — those for Intel-compatible PC operating systems and Web browsers — have not experienced the rapid development that the Court had anticipated they might when it limited the initial term of the Final Judgments to five years,” the states argued in a Nov. 16 filing to U.S. District Court Judge Colleen Kollar-Kotelly. “This is a ‘changed circumstance’ that has an important bearing on whether the Final Judgments have had sufficient time to achieve the pro-competitive benefits that the Court expected they would — and that the public itself is entitled to receive.”
Lead by California and New York, the states have asked Kollar-Kotelly to extend her monitoring of Microsoft’s business practices another five years, until Nov. 2012. In a series of legal filings since August, Microsoft and the DOJ have argued that an extension is unwarranted while the states have pressed for the longer oversight.
In their most recent brief, the states countered Microsoft’s contention that Web-based companies — Google, Salesforce.com, Yahoo, eBay and others — and new Web-centric technologies constitute what Microsoft dubbed a “competitive alternative to Windows.”
Not even close, said the states.
“While these companies’ products provide some functionality for users, they still depend upon a PC operating system and browser — the two spaces where Microsoft dominates — and thus they are not yet able to reduce the applications barrier to entry.”
A pair of experts that the states hired to write rebuttals to Microsoft’s position were even more damning. For all the talk about “OS agnostic” applications, Web. 2.0, Google’s dominance in search and Firefox’s inroads against Internet Explorer, the collective cannot compete with Microsoft where it counts, said Ronald Alepin and John Kwoka in separate reports filed along with the states’ brief.
“The ‘Internet Platform’ … does not even exist, much less constitute for the foreseeable future a practical or viable alternative to the desktop platform,” said Alepin, a technical advisor with the law firm Morrison & Foerster, and a frequent expert witness for parties facing Microsoft in court. “Firefox has yet to reach a level of penetration and use that Microsoft’s own internal measures indicate is necessary for survival and for the all-important ability to influence developer choices,” Alepin added later in his rebuttal. “With a market share of less than 20%, Firefox does not have the influence to promote the adoption of alternatives to standards or extensions advanced by Microsoft.”
He even badmouthed Apple, which has been lauded for its hardware market share gains and the design of its operating systems, as too weak to capitalize on its successes, and ultimately no threat to Microsoft. “In spite of the advantages of arguably superior products and missteps by Microsoft, Apple has been unable to raise its share of the worldwide installed base of PCs, hovering near 3%,” Alepin said.
Kwoka, a professor of economics at Northeastern University, was even blunter in his assessment of Microsoft’s rivals. “I analyzed the economic evidence and concluded that there was no indication in the relevant market that these technologies have yet had a restorative effect on competition,” he stated flatly.
“Competition in the market for Intel-based PC operating systems has not been restored by the five year term of the Final Judgment,” he concluded.
Under the temporary extension agreed to late last month, Kollar-Kotelly has until the end of January to decide whether to extend the settlement’s oversight terms.