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December 23, 2002

M$oft Loses in Court over Java

In a private antitrust decision, Microsoft was ordered to carry Java as part of its operating system, a major technology victory for consumers.

Why is this important? Because Java is designed to be a language that runs the same on any computer, so it has the potential to make what operating you use irrelevant. And that would mean that Microsoft would lose its ability to lock in customers based on their need to run old programs that won't work on competing operating systems.

Microsoft was almost bound to lose this case. Last year when the DC Appeals Court overturned the breakup penalty on the company, it still went out of its way to condemn Microsoft for its monopoly practices. And one of the prime examples the Appeals Judges cited was Microsoft's assaults on the competitive challenge of Java. Microsoft had deliberately tried to undermine this cross-platform nature of Java by creating its own distorted version. The Court cited a document by Microsoft that outlined its strategy: "Kill cross-platform Java by grow[ing] the polluted Java market." As I noted in an analysis for my old organization, NetAction, at the time:

Give the Microsoft folks credit for honesty--they referred to their own product as "polluted." But such anti-competitive "pollution," declared the Court, is not about technological superiority but about deceit and illegal and anti-competitive destruction of standards that would otherwise benefit consumers through increasing the compatibility of different software products and hardware.

Beyond anti-competitive deals and deceit, the Appeals Court accused Microsoft of undermining Java and innovation through straight-up intimidation and threats. Back in 1995, Intel was in the process of developing a high-performance Windows-compatible computer chip that would make the original Java standards run extremely fast and efficiently. Microsoft warned Intel that unless it abandoned those efforts, Microsoft might work with rival chip makers to hurt Intel. The Appeals Court dismissed Microsoft's legal defenses on this point, which was that the company was trying to "lamely characterizes its threat to Intel as 'advice.'" But the Court noted that giving advice "to Intel to stop aiding cross-platform Java was backed by the threat of retaliation" which thereby stifled innovation by Intel.

This loss of innovation due to Microsoft power is the point I always emphasize to people trying to understand what was at stake in the antitrust campaign against the company. Back when many of us began the campaign against Microsoft, a lot of folks were still buying the idea that corporations didn't need policing by either securities regulators or antitrust courts. The financial costs of the dotcom bubble and untrammelled arrogance by corporate titans has been the most obvious lesson.

But there was also the more subtle but potentially more devastating loss of innovation and creativity as business manipulators like Bill Gates, using the fat profits of the era, were able to win out for control versus legitimate technological innovators. This latest ruling against Microsoft over its illegal attempts to undermine Java's potential is a good reminder of that loss during that period.

Posted by Nathan at December 23, 2002 11:41 PM

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