5 giug 1995 anni - Time: 1995: Microsoft anticompetitive practices. Network effects, "platform lock-in", Control of standards

Descrizione:

"What Gates understands better than anyone else is that control over the standards that others must adhere to is the great lever of wealth and power in the digital age."

BILL GATES: MINE, ALL MINE
BILL GATES WANTS A PIECE OF EVERYBODY'S ACTION. BUT CAN HE GET IT?
By Philip Elmer-Dewitt Monday, June 05, 1995

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Ask Bill Gates, the founder and chairman of Microsoft, about something he wants to talk about-like a new software system or his upcoming railroad trip through China on Chairman Mao's train -- and he acts like the teenage boy that he still resembles. He grins. His voice breaks. He tucks his elbows into his lap and rocks back and forth as if to contain his excitement. But press Gates on a subject he doesn't want to talk about-like the charges of anticompetitive, and possibly illegal, business practices that have been turning up lately, like ex-girlfriends at a wedding party -- and he is liable to throw a tantrum. "I challenge your facts!" he shouts when confronted with a new but relatively minor allegation. "That's a lie! I mean, it's just not true. I never heard of any such thing. What a bunch of nonsense!"

It is a curiously revealing moment. All the more so when a company spokesman concedes a few days later that this particular charge -- that Microsoft required potential competitors to tell the company their product plans before they would be allowed to participate in a Microsoft developers' conference-is well documented.

Up until now, Gates has largely controlled the unfolding of his remarkable story. At 39, he seems to have achieved the information age's equivalent of the American Dream. Through intelligence, ruthlessness and hard work he dominates a technology so central to modern life that it touches nearly every office, school and desktop. He is very, very rich and so powerful that even his enemies are eager to cut deals with him. Now he wants more, a piece of all the action - the bills people pay, the phone calls they make, the news they read, the TV they watch. But he may have reached that point in the arc of his success where the very qualities that raised him high could start to drag him down.

If Gates is feeling a little cranky these days, he has good reason. The Justice Department just derailed his $2 billion bid to acquire Intuit and its popular Quicken electronic-checkbook program, a deal that would have helped realize Microsoft's ambition to make money from almost every commercial transaction in cyberspace. Another team of government lawyers is asking questions about Microsoft Network, the new online service he plans to launch in August. And an antitrust suit that has been hanging over his head for nearly five years -- and which he thought he had settled last summer -- is in legal limbo, held hostage by an ornery federal judge.

Despite the company's reputation as a juggernaut, Microsoft is running into some unexpected snags in the marketplace as well. Gates wants desperately to seize control of the so-called local area networks, where more and more corporate business is done. But the company is having trouble developing a product that can compete with Lotus Notes, which dominates the market for "groupware" (the software that helps people brainstorm over these networks). Novell's NetWare still controls two-thirds of the market for the software that runs the office systems, despite Microsoft's best efforts with Windows NT. And Microsoft's sql Server is still struggling to win customers from Oracle, which owns almost half the market for the critical database software that stores the corporate world's most important information.
...Microsoft could even have difficulties in desktop computing -- a business that Gates helped nurture from a hobbyist's amusement into a $100 billion industry and that is running out of room for growth. Windows 95, a product Gates is counting on to lead his charge into online services and electronic commerce, has run into one delay after another. And now, less than three months before the program is scheduled to hit the stores, just when Gates was supposed to ride the tide of industry support behind what could very well be the next personal-computer software standard, he finds himself under attack on all sides:

-- From users, who complain that some of Microsoft's mainstay products, like the latest version of Word for the Mac, have become bloated and sluggish, and that the company's first attempt to create a more "social" kind of software (the much ballyhooed Bob) was too condescending.

-- From the computer press, which has long acted as Gates' head cheerleader (even more so since he became rich and famous) but now seems to delight in reporting Microsoft's every delay, every bug and every legal setback.

-- From newly emboldened competitors, who have quietly complained for years about Microsoft's strong-arm business tactics and only in the past few months have begun putting those complaints on the record.

-- From government officials, who are concerned that Microsoft has developed a choke hold on a critical industry and who view with alarm the prospect of Microsoft's moving into banking, telecommunications, publishing and entertainment.

These issues came to a head in February, when the antitrust settlement Gates reached last July with Assistant Attorney General Anne Bingaman ran into a roadblock in the person of federal judge Stanley Sporkin. In a widely quoted decision, Judge Sporkin rejected the deal, agreeing with most observers, who believe it was too favorable to Microsoft. "It is clear to this court," he wrote, "that if it signs the decree presented to it, the message will be that Microsoft is so powerful that neither the market nor the government is capable of dealing with all of its monopolistic practices."...

Fueling the debate-and industry gossip mills-are fresh details of Microsoft's hard-nosed business dealings. In a new book called Startup (Houghton Mifflin; $22.95), for example, GO Corp. founder Jerry Kaplan tells how in 1989 his company, hoping to persuade Microsoft to write some software for GO's pen-based computer system, gave Gates and his developers a demonstration of how it worked. Microsoft said it wasn't interested. But two years later, the company unveiled a competing system called Pen Windows that bore an uncanny resemblance to GO's design, even using the same "gestures" to insert and delete characters. Microsoft calls the account "factually inaccurate."

More recently, according to court papers submitted last February by Apple Computer, Gates personally threatened to stop developing application software for the Macintosh if Apple continued working on a programming tool that would compete with Microsoft's. "Since Microsoft is the largest supplier of software applications for the Macintosh," wrote Apple general counsel Edward Stead, "this threat was a serious one." Gates denies saying any such thing.

But such a thing would not be out of character. In a complaint filed in April as part of the Intuit suit, the Justice Department quoted a memo, directed to Gates, in which a Microsoft vice president told how he had tried to pressure Intuit chairman Scott Cook into accepting a $1 billion buyout offer by hinting that Microsoft might spend the money attacking Intuit in the marketplace. "I tried to tell him how much we could do with $1 billion," the V.P. wrote. "I tried to be nonthreatening, but let him know we would do something aggressively."

...

How big is Microsoft? Measured by the standards of the computer makers, it seems relatively small. Its annual revenue is half that of Apple and one-fourteenth that of IBM. But software is vastly more profitable than hardware. Apple makes 3.3% profit on every dollar of sales, compared with nearly 25% for Microsoft. In some respects, the power Microsoft wields over the computer industry may exceed IBM's in its heyday.

Eight out of 10 of the world's personal computers could not boot up (that is to say, start) if it were not for Microsoft's operating-system software-programs like MS-DOS, Windows and Windows NT. What is even more impressive (not to mention profitable) is that the company also dominates the market for almost every big-ticket application program, like word processing (Microsoft Word), electronic spreadsheets (Excel), filing (Access), scheduling (Project) and the new all-in-one program "suites" (Office). Microsoft's Flight Simulator is one of the best-selling PC games of all time. Microsoft's electronic encyclopedia (Encarta) outsells the Encyclopaedia Britannica...

So is Microsoft a classic monopoly? Not exactly. For one thing, it fosters competition, at least within some well-defined boundaries. Nor has Microsoft lowered prices to drive competitors out of business and then raised them to gouge consumers. "Microsoft cut prices when it didn't have to," says Jesse Berst, publisher of the industry newsletter Windows Watcher. "It's something that Apple could have done if they'd had the courage, and IBM too."

What Gates understands better than anyone else is that control over the standards that others must adhere to is the great lever of wealth and power in the digital age. Just as the value of a telephone network increases with each new phone added to the system (because it gives everyone on the network one more person to call), so does the value of a computer system increase with each program that runs on it. This is what Stanford economist Brian Arthur calls the law of increasing returns-a twist on the classic law of diminishing returns.

...

Using a strategy Arthur calls "target, leverage, link and lock," Microsoft proceeded to convert dos users to Windows users, Windows users to Word users and so on down the product line. Microsoft's customers, of course, were free to switch to WordPerfect for Windows or Lotus 1-2-3 for Windows or any other competing products. But by the time those programs were ready, Microsoft already owned the markets. "You could argue," says Arthur, "that Microsoft is the product of clever strategy, mediocre technology and a hell of a lot of increasing returns."

The links that bind users to Microsoft software run deep-down to the level of "plumbing" invisible to the user but of critical importance to the programmer. For example, Microsoft has for several years been using a tool called ole (for object linking and embedding) that makes it easier for users to move information from one Windows application to another - to shuttle an expense report from a spreadsheet to a word-processing document, for example. Apple is developing a competing system, called OpenDoc, that is supposed to run equally well on Windows, Mac and IBM's OS/2. But if a programmer uses OpenDoc instead of ole, he runs the risk that Microsoft will at some future point make a subtle change in Windows that would render his programs useless. "Everything Microsoft is building is linked to ole," says Jerry Michalski, editor of the newsletter Release 1.0. "Everywhere you look there are these dependencies."

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