More NewsJohn Akers’ Revenge

John Akers’ Revenge

Boy, that Microsoft antitrust thing sure was entertaining. It had great characters, a plot any reporter could follow, and (supposedly) a definite ending. Unfortunately that's not the way business works. The way it has been explained to you has nothing to do with what's really happening. The impact of the Microsoft case came long before last week's finding of fact by Judge Thomas Penfield Jackson.

Boy, that Microsoft antitrust thing sure was entertaining. It had great characters, a plot any reporter could follow, and (supposedly) a definite ending.

Unfortunately, that’s not the way business works. The way it has been explained to you has nothing to do with what’s really happening.

The impact of the Microsoft case came long before last week’s finding of fact by Judge Thomas Penfield Jackson. Today’s computer industry is far different from that which existed before the suit, and the ruling itself has nothing to do with it.

When the case was filed, Microsoft faced competition in web browsers and held a firm monopoly on operating systems. Today, Microsoft has a virtual monopoly on browsers but faces competition in operating systems from Linux on the server, from Macintosh and Palm Pilot on the client, and from a bunch of others (led by Oracle) in the databases that tie those two together.

Before you say, “I told you so, the thing never should have happened,” it must be added that without the suit, these challengers never would have arisen. In 1994, Bill Gates could have crushed Linux at a single blow; he’d already destroyed the Macintosh, and the Palm war was in the process of being won. (The Oracle challenge had scarcely been imagined yet.)

Instead, the suit forced Microsoft to hire herds of lawyers and flocks of PR flacks, who have spent the last few years slowing the company and preventing it from acting as it did, say, in the early 1990s. All statements have to be cleared through the bureaucracy, and it’s the bureaucracy that’s crushing Microsoft, not Judge Jackson. The bureaucracy survives regardless of what happens. Even if Microsoft is broken up, the bureaucracy survives to oversee the break-up.

I’m not talking about government bureaucracy here, but the private bureaucracy of forms, formalities, and procedures spawned by actions of a relative handful of government lawyers. It’s this bureaucracy that burdened IBM for 30 years (the first anti-trust “consent decree” against Big Blue came in the mid-1950s).

By John Akers’ time as chairman, in the 1980s, IBM was helpless before the first smart kid it faced with a Clue, namely Gates. Gates understood then that control of computing lay at its base, at the operating system level, and he focused on that. IBM took its eye off the ball because its own bureaucracy distracted it.

Don’t bet on relief coming from a break-up, either. AT&T and its “Baby Bells” still pay more attention to the government than they do to competitors. All the break-up did was create eight (now five) masters of the bureaucratic game on both the state and federal level. AT&T’s attempt to recreate its monopoly status through cable modems is the kind of thing that could only occur to a company basing its strategy on government anti-trust time frames, not Internet time.

The only real solution may be the one IBM “chose” in ignorance. It lost its way, and the government finally left it alone. Given the growing market share of the Mac, the recent moves by Palm Pilot and Handspring, and the steady growth of Linux, this may be the path Microsoft is choosing, too. Maybe John Akers’ wasn’t so Clueless after all.

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