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Opening Windows: Will Microsoft Change Affect the Average Consumer?

Aired July 12, 2001 - 07:35   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LINDA STOUFFER, CNN ANCHOR: Microsoft says it's going to allow computer makers to remove its products from desktop computers. Now, that move comes two weeks after a federal appeals court ruling. That ruling upheld the lower court finding that the software giant illegally maintained its monopoly in desktop operating systems.

So what does all of this really mean? Well, Jason Pontin has been keeping an eye on Microsoft and its many critics. He is the editor of "Red Herring" magazine. He joins us now live.

Hi there, Jason. Thanks for being with us.

JASON PONTIN, EDITOR, "RED HERRING": Good morning, Linda.

STOUFFER: Why is Microsoft doing this now? Why is Microsoft picking this time to make the change?

PONTIN: Well, the stuff seems a little bit complicated, but it's actually kind of funny. And it is not uninteresting.

I want you to imagine Microsoft as being, as it were, the Robert Downey Jr. of -- for the corporate world. I mean, every now and then, they are forced to go in front of the government, and they swear that this time around, they will go and do good business practices.

As recently as 1996, Microsoft promised to be a good corporate citizen. And then every single time they are dragged back in front of the courts and they swear they're not going to do it again.

Now, what's happened this time is, even though Judge Jackson's remedy was thrown out of court, Microsoft is still thought to be abusing its monopoly power. And what the remedy is against Microsoft is still in doubt. So Microsoft, in a fairly canny move, has shown that this time around they are not going to be bad again. They made a unilateral decision to try and be a good corporate soldier and actually do what the government has been asking them to do for a while, which is to allow personal computer manufacturers to arrange the Windows desktop in any way they want.

STOUFFER: Promises, promises.

Well, it sounds like you are saying this is some smart politics at work here. But is it just smart politics? Or will it really make a difference to you and me?

PONTIN: I think it's a canny decision in some ways. In terms of how you and I live, it is going to make no difference at all, because for better or worse, Microsoft has the monopoly now on browsers.

I mean, God knows Netscape still exists. But now it's simply part of AOL and Sun. It's not a competitor to Microsoft. But what Microsoft gets to do by doing this, it gets to go and show that it's actually going to once, for the first time, actually try and play by the rules.

STOUFFER: Play nice, huh? Well, what happens if the states and the Justice Department don't think it's enough; they don't think it's much more than a P.R. move? What happens then?

PONTIN: Excellent question, Linda, because already the states attorney generals have already been saying this doesn't go nearly far enough.

I think what is most likely to happen is, as we speak, I'm sure there are DAs throughout the States who are beavering away who want to go and get a much more rigorous remedy against Microsoft. Microsoft is doing this also for a purely financial reason. They have a big product release coming out called Windows XP. It's the successor to Windows 95 and Windows 98.

What Microsoft doesn't want is some state attorney general to say they can't ship Windows XP on time. So I imagine the next stage is they might go and make another compromise. It's actually fascinating to watch.

STOUFFER: Well, in your eyes, is this a corporate rethinking of the monopoly accusations, or is this just more of the same?

PONTIN: Well, you have to understand, in the United States of America, having a monopoly is not against the law. However, we have something called the Sherman Act. And the Sherman Act says you cannot abuse a monopoly.

And that's been the government's case against Microsoft from the very beginning. They claim that by not allowing PC manufacturers to, let's say, put the Netscape icon on the desktop back when this mattered, Microsoft is effectively bundling two separate businesses. And that was an abuse.

The sad truth, though, is that in this day and age, desktop software, it's all integrated. The Internet has made it all join together. And whether we like it or not, Microsoft fundamentally owns all these businesses.

STOUFFER: OK, Jason Pontin with "Red Herring" magazine, thank you for explaining that to us. And I know you will keep us updated. Thank you.

PONTIN: Thank you.

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