Window to world domination still open

You have to hand it to Microsoft. By its dogged refusal to admit it had done anything wrong and by an unrelenting pursuit of its own interest it has emerged from the long running US anti-trust settlement almost as strong as ever.

The world's most successful democracy was no match for one of the world's most successful corporations. One of the most important aspects of the case has not been discussed because it didn't come under the writ of the court - what "ought" to happen to the monopoly profits earned by Microsoft in the past?

The higher court had already ruled that Microsoft's monopoly was not illegally acquired but did conclude that it was illegally maintained. So, for years, Microsoft has been operating an illegally maintained monopoly.

Could this, just possibly, have anything to do with Microsoft's announcement of a sharp rise in profits in the latest quarter at a time when the rest of the industry has stagnated.

This will add to the company's huge cash mountain and enable it to spend yet more on hiring the best people and spending all that it takes to preserve its market position. Why should it be allowed to keep the excess fruits of an illegally maintained monopoly?

At the very least it should be shamed into giving a donation of, say, £100m to help the free rival operating system, Linux, provide the glimmer of competition.

The higher court had already decided not to break Microsoft up. The lower court, as is customary, merely had the job of drawing up the remedies. The district court judge decided not to force Microsoft to share its browser software code or to make its operating system more compatible with the products of competitors.

This at once removed the obviously "just" solution of enabling non-Microsoft products (like browsers and media players) to compete on an equal footing with similar products produced by Microsoft itself, which has the overwhelming advantage of having its Windows operating system installed in over 95% of personal computers.

The best compromise solution would have been to hive Windows off into a separate company legally required to give equal access to all software, from spreadsheets and word processors (which Microsoft currently also dominates with a 95% market share) to browsers, accounting packages and future products linked to interactive television.

Instead, the district court merely proposed that Microsoft shares some of its "downstream" code with competitors to make it easier for them to compete with rival products. For example, Microsoft must in future disclose and license the communications protocols utilised by its PC operating systems to communicate with Microsoft's servers.

But it retains a strong competitive advantage over its rivals since it will be able to ensure its products run more smoothly and in a more integrated way with Windows and reach the market earlier.

It is good that the court has made it more difficult for Microsoft to insist that its software products become the default ones in computers manufactured by OEMs (original equipment manufacturers) and it is good that it will have to make it easier for customers to disable built-in Microsoft products.

But, as the Wall Street Journal observed, users who want to cleanse existing Windows computers of Microsoft programs "may not find the process easy, unless they are technologists".

The process (only available for Windows XP and Windows 2000) involves downloading free "service packages" and, once installed, the user has to either disable all the Microsoft defaults in one go (including email and web access) or customise their program preferences one by one.

This may be good news for Online's Ask Jack column but it isn't going to result in hundreds of thousands of consumers switching from MS products because that's not the way the world works.

One potentially interesting ruling by the judge is that the court "will hold Microsoft's directors, particularly those who testified before this court, responsible for implementing each provision of this remedial decree".

The trouble is that the provisions are so weak that Microsoft has a vested interest in compliance. Meanwhile, the show has moved on. The worries about Microsoft's monopoly have moved on to concerns about its net services and other innovations.

It is unlikely that competitors will want to waste another five years of litigation when more judges will be Bush appointees. Unless the European commission's parallel investigation comes to stronger conclusions - and doesn't fall foul of the Bush administration belief that US law is the only one that matters - then Microsoft can sail on into the sunset.

Microsoft has even beaten Drucker's law. The renowned US management guru, Peter Drucker, said he wasn't worried unduly about Microsoft's market power because no non-governmental monopoly had ever lasted more than 15 years. Not any more.