Microsoft's bad boy style is its undoing Sofware giant has only itself to blame for fire drawn from enemies


By some alchemy of bad behavior and bad public relations, Bill Gates has contrived to give Microsoft Corp. the same public image as the folks who pollute waterways and sell tobacco.

State attorneys general are politicos, usually governor wannabes, not the type to spend a lot of time worrying about national technology policy. The very fact that 20 state attorneys general would join the U.S. Justice Department in filing antitrust suits against Microsoft means they've found a company their constituents love to hate.

Microsoft's Windows software runs about 90 percent of all the personal computers in the universe - the familiar Windows "desktop" is the first thing the computer user sees when turning the machine on in the morning. Microsoft has cleverly exploited its control of Windows to own the dominant market share in most personal computer "application" software, like word processors and spreadsheets.

So why is the company so hated? One reason is that Gates has dreadful public manners, and loves calling his competition "stupid" or "random." He is also the richest man in the history of the world, with a personal fortune of more than $40 billion and rising. And he heads a company that has been caught red - handed trying to force computer makers not to load his competitors' software. We have seen Microsoft Web browsers that disable competitive browsers, the software that allows you to plug into the Internet and World Wide Web.

This is far more than a public relations problem. A software executive once said a licensing agreement with Microsoft "is like a Nazi nonaggression pact. It just means you're next." Gates' company still has the guerrilla - warfare reflexes learned in the days when he and co-founder Paul Allen were hacking software in a garage.

This Boys Behaving Badly business style doesn't work when your company is worth more than General Motors. The model in this is IBM, which over the years has developed immaculate manners in dealing with smaller companies. Gates wrested control of the desktop in the 1980s, mostly because of bad decisions at IBM, but partly because he exploited their good manners. He may have learned the wrong lesson from the experience: that decent behavior gets you killed. But keeping a sharp lookout for a future Gates is one thing; spraying the landscape with machine - gun fire is another.

Microsoft gets little enough credit for its immense accomplishments. The company's software is fat and buggy, but it is still as good as any, probably better than most. Over the years, it has achieved a good deal of integration among a vast and growing armory of products. An enormous number of people who wouldn't have dreamed of using a computer a decade or so ago now write letters, do their taxes and browse the Web on Microsoft software.

All computer products are still too hard to use, and the whole industry has an irritating habit of pushing products out the door early, letting the user find the bugs and then fixing them over time. There is much to complain about, and Microsoft has become the logical target for a lot of pent-up frustrations.

Need for caution

The current flap is a good example of the need for caution in making snap judgments. It was precipitated by the company's announced intention of "integrating" its browser into Windows, which will make it hard for any other browser to compete.

Although the move looks predatory, it makes a good deal of technical sense. An integrated browser, for example, would let you download a tax form from inside your financial software with just a click of the mouse, which would be a real convenience. Over the years, Windows has integrated lots of other software that used to be sold separately, such as virus scanners, data repair, calendars and address books, with nary a peep from consumers. Depend on it, sooner or later, the browser will be integrated into Windows; it makes too much sense not to.

The real fear is a broader one - that Microsoft is using its control of the desktop to build a software monopoly and gain a chokehold over the Internet and all Internet commerce and entertainment. For the time being at least, this is so much hyperventilation. Microsoft is nowhere near dominating the software industry. It dominates the stand-alone personal-computer software industry, which is quite a different thing.

It has a far weaker position in entertainment and business software, which is more profitable and faster growing. It is trying hard to extend the Windows model to the entire computing universe, but with only mixed success. The business-networking model, in fact, is probably moving away from the kind of fat, fully loaded, desktop computer Microsoft prefers. Bosses don't want their employees downloading Internet games during working hours.

Similarly, worries that Microsoft may some day gain undue control over Internet commerce or content distribution are not completely crazy, but they're still far from having any substance. The same worries, remember, made banner headlines when Sony bought Columbia Pictures.

The real monopolies

There are also several reasons why it's nice having a powerful Microsoft around. While it concentrates on Web browsers, the Justice Department seems blithely unconcerned about some real monopolies taking shape with the wave of telephone-company mergers.

There is considerable evidence, which, somehow, has escaped the attention of industry regulators, that telephone companies have been using their monopoly positions to withhold technology that would allow high-speed, low-cost Internet access over normal telephone wires. We're talking up to a hundred times faster than most of today's modems. Microsoft is heading a coalition of computer companies working to force the technology out of the phone-company labs. Sometimes, countervailing power is in the consumer's corner.

In the same way, network television has been dragging its feet on the move toward digital television and resisting standards that would make televisions more interactive. Once again, it is Microsoft that is rallying the forces for modernization.

However one deplores Microsoft's predatory instincts, it's even more unsettling to watch Washington law firms salivating over the prospects of another decade-plus legal extravaganza like the notorious U.S. vs. IBM antitrust action. The Justice Department should probably have a full-time Microsoft desk to watch out for anti-competitive behavior, but it's far too soon to embark on a messy "break up Microsoft" adventure. In that respect, the interest of state attorneys general is a bad sign, signaling the start of a political free-for-all that could squash any hopes for sensible policy-making.

Getting kicked to death by grasshoppers is a painful and TC ignominious way to go. Even if Microsoft escapes this legal round unscathed, the boys at the top may finally understand it's time to start acting like grown-ups who are running one of the most important, most visible and most scrutinized companies in the world.

Charles R. Morris, a Wall Street consultant, is co-author of "Computer Wars: How the West Can Win in a Post-IBM World."

Pub date: 5/24/98

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