Article 108 of 200
Microsoft monopoly survives breakup: analysts by Valerie Leroux
Agence France-Presse
(Copyright 2000)


NEW YORK, June 7 (AFP) - The breakup of Microsoft is a drastic remedy that will have deep repercussions in the software industry, but little or no effect on the underlying issue in the case, Microsoft's monopolistic powers, according to analysts.

Judge Thomas Penfield Jackson ordered the breakup on Wednesday after ruling that the company bullied its rivals in a bid to crush competition.

Under Jackson's ruling, which the firm has said it will appeal, Microsoft is to be split into two companies, one to develop and promote its Windows operating system and the other to specialize in computer software applications, including Internet browsing technology.

"That would leave the operating monopoly in place. This is the competitive problem at the core of Microsoft case," said Thomas Lenard, vice-president for research at the Progress and Freedom Foundation.

Lenard and other analysts maintain that the software giant should be divided into at least four parts, with the operating system carved up between three of them, all competing with one another.

"The creation of three Windows companies would immediately replace monopoly with competition in the market for operating systems," he said.

"The Windows companies would compete on the basis of price, reliability and quality."

The breakup works, however, for applications. A separate computer software applications unit would already have its hands full with competitors such as Linux, offering "consumers meaningful choice," said Robert Lande, law professor at the University of Baltimore.

For consumers, the split will have no immediate effect, according to Shane Greenstein, a management professor at Northwestern University's Kellogg Graduate School of Management.

"When the next major innovative opportunity which influences both operating systems and applications occurs, he (the consumer) will notice a difference," he said.

One difference could be a rise in prices and incompatibility between systems, said Nicholas Economides , professor of economics at New York University.

For a start, Internet Explorer, bundled free by Microsoft in its Windows package, will cost money when sold by a separate entity.

University of Texas professor Stanley Liebowitz said the breakup would cost computer programmers 30 billion dollars in new software compatible with different types of systems.

"This is not Standard Oil -- back in 1911 when nobody was driving automobiles. Everybody has a computer," he said, referring to the breakup of the old oil monopoly.

Innovation at Microsoft will also be affected by any breakup, according to the analysts, because it will block the sharing of ideas and research on operating systems and software applications. Also, the energy Microsoft has had to spend defending itself in court will eventually take its toll.

"If Microsoft concentrates itself too much with legal problems and a breakup, it can't spend these efforts innovating and creating new products," said Economides .

"This business is very competitive and fast moving. If they lose a year, that's a very serious loss."



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