But victorious trustbuster Joel Klein likes that word, too. “I’m confident that the remedy will be upheld,” he says. “And I’m confident that it’s the right remedy.”
Someone’s confidence is obviously misplaced here. But only Klein can afford to be wrong. If an appellate court tosses out the breakup remedy (good chance) or even overturns the whole thing (less likely but not impossible), he’ll always have his memories of Judge Jackson adopting his every suggestion at the expense of those hapless geeks from the other Washington. Meanwhile, it’s Gates who’s hanging on by a smile and a stay. If he loses his bets, Microsoft’s divvy-up session would make Lauder v. Duff look like a lovefest. (“I’ll take the Voice Recognition team!” “Only if you give up two interface gurus and the waterfall at Red West!”).
Bill Gates has to know this. The attitude has changed in Redmond. The Softy world was rocked in March and April when the stock tanked from 119 to the sad 60s. This wasn’t in the employment manual. The company no longer maintains the pretense the legal mess is merely a distant rumble that doesn’t affect its business at all. Now we’re informed of hopes that the impact on its crucial Next Generation Windows Software initiative will only be “minor.” Much time is spent assuring employees and college recruits that this mess will blow over. But group VP Jeff Raikes speaks for all of Microsoft when he describes the legal situation as “surreal.” Surreality is not where you want your company to be.
But if reality is the Final Judgment plan, an altered state might be preferable. Joel Klein envisions two powerful new firms concocting innovations as they go at each other’s throats. But Microsoft people generally believe that the “OpsCo” entity–the one that inherits Windows–will be severely disadvantaged. Although initial revenues would be high, for three years it would labor under strict restrictions. “It’s a company that is explicitly barred from competing in the marketplace in the most important way,” Microsoft CEO Steve Ballmer told me. If breakup occurs, expect the best Softies–at least those not on the next shuttle to Silicon Valley–to join “AppsCo” a Net-ready, restriction-free firm loaded with Microsoft Office bucks. But even AppsCo will be a glum place, because without Windows it’s merely a random collection of businesses.
That’s why Microsoft smiles are so unconvincing. Those smarties know they look like classic deniers, playing the confidence game while their future rides on the whims of a bunch of gray-haired judges. What else can we do? they ask. While the appeal proceeds, they profess to be stuck.
Not necessarily. There is a way that might end this mess forthwith. The whole brouhaha is really based on one issue, a standoff that was probably the main sticking point in failed settlement talks. Microsoft considers its ability to do whatever the hell it wants with Windows as a basic human right. It clings to an appellate court ruling that seems to back this up. But the government disagrees, and it successfully convinced Judge Jackson that when a monopoly revises products to crush competitors, even ostensible “innovations” can violate the law.
Principles are fine things. But worth dying for? With the judge’s ruling, Microsoft has only the fire wall of an appeals decision to stave off the apocalypse, and any hacker can tell you that a fire wall can be breached. So it’s time to set principle aside. Microsoft should let all parties know that it’s willing to give up its claim to unfettered innovation, and agree to a period–three years?–where new features will have to be implemented in a way that preserves competitors’ business plans. Windows may not be as elegant with browsing functions sold separately, but it would still be Windows. And while such concessions would complicate the development of NGWS, the job would be a piece of cake compared with the probably doomed task of salvaging the companywide initiative if Microsoft were split.
If Microsoft compromised enough–way past the point where it hurt–the government would be hard-pressed to spurn its offer. Klein could credibly claim victory. Also, a settlement would get the government off the hook if the bust-up turned out to be a bust. And there’d be no worries about President Dubya pulling the plug on the suit.
So listen up, Bill. Your smile may indeed reflect confidence that your appeal will prevail. But consider that two years ago, you were more than confident that things would never get this far. Stop standing on principle and start negotiating. Do you really want to spend the first day of the rest of your life beginning your new job at… AppsCo?
