Interesting People mailing list archives
Cringely's latest is interesting ...
From: Dave Farber <dave () farber net>
Date: Wed, 13 Nov 2002 20:12:44 -0500
------ Forwarded Message From: Randall <rvh40 () INSIGHTBB COM> Reply-To: Law & Policy of Computer Communications <CYBERIA-L () LISTSERV AOL COM> Date: Wed, 13 Nov 2002 15:47:45 -0500 To: CYBERIA-L () LISTSERV AOL COM Subject: <[CYBERIA]> Cringely's latest is interesting ... http://www.pbs.org/cringely/pulpit/pulpit20021107.html NOVEMBER 7, 2002 The True Believer Can Mike Doyle Do to Microsoft What the Rest of the Computer Industry and the Department of Justice Couldn't Do? By Robert X. Cringely These are happy days in Redmond, Washington, with Microsoft having defeated, coopted, or survived the Department of Justice, depending on what side of the issue you stand. Microsoft shares are surging, and the future seems bright with only a few more legal speed bumps in the way. There are the private anti-trust suits from AOL/Netscape, Sun, and others. There are a few class-action lawsuits still pending in California, where Microsoft runs afoul of a state anti-trust law. And there are the inevitable patent infringement cases that have dogged Microsoft for years. These latter lawsuits are the topic of this column. The only part of the final judgment I like is the part most Microsoft foes hate the most. Instead of a panel of three outside observers to monitor Microsoft's compliance with the judgment, the compliance officer will be one person chosen by Microsoft from its own ranks. While this would appear to be a matter of having the fox guard the hen house, the judgment specifically makes the Microsoft board of directors personally responsible for compliance. So if the compliance officer, in a moment of weakness, looks the other way as Microsoft crushes an opponent in violation of the judgment, Gates, Ballmer, Shirley and the others will have to pay, personally. I like that. Two facts emerge from the final judgment issued last week -- that Microsoft has abused its monopoly and that this judgment makes no effort to deprive the company of the fruits of that abuse. This is interesting because the point of Federal anti-trust law is two-fold, to prevent or correct abuses and to deprive from the abusers the benefit -- called the fruit -- of their crimes. No fruit here. Microsoft pays no fine, gives no rebates, distributes no free product. The company sits on $40.5 BILLION in cash, at least some of which can be counted as fruit, and that cash remains intact. Isn't that odd? You'd think the Bush Administration could use some extra money for fighting terrorism or drilling for oil in wildlife refuges or even paying-down the national debt, but no. Microsoft would have GLADLY paid a few billion to receive the very judgment they got last week, so this was a true missed opportunity on the part of the government. Heck, they could have just sent the Operation Saddam bill to Redmond, and Bill Gates would have paid it. Instead, it is left to the private anti-trust suits to seek damages. These suits have been "tolled" (lawyerspeak for "delayed") until the Department of Justice suit was settled, which is now. Sun wants $1 billion, for example, and some behavioral changes in the way Microsoft does business. But in the current economic climate, would Sun take a quick $1 billion and no behavioral changes? They probably would if the alternative was years of protracted litigation. So too with AOL, a company that has almost completely subsumed Netscape and could sure use some extra revenue in the current lousy ad market. If Microsoft is smart they will quickly settle these suits -- all of the anti-trust suits -- for cash. I can't imagine that it would cost more than $5 billion, total, and maybe a lot less. Microsoft gets good PR for coming clean and its cash stash drops a bit, helping the company to justify its continued reluctance to pay a dividend or buy back stock. Bill Gates once told me that he liked to keep enough money on hand so that Microsoft could go a full year operating as normal, but with no revenue at all. Taking Microsoft $32 billion in expected sales for the current fiscal year and deducting its expected $10 billion in expected profit, that means it takes $22 billion to run the store for a year, meaning Microsoft has plenty of money to pay off its enemies and still hold enough reserves to keep Bill happy. All of this depends, of course, on the willingness of the remaining plaintiffs to settle for money alone. Most of the parties will do this. Certainly, the public companies like Sun and AOL would be hard-pressed not to, since shareholders might view rejecting a billion in cash as acting against their fiduciary responsibility. The class action suits are generally looking for money. And Microsoft has a long tradition of quietly paying-off plaintiffs in its intellectual property cases. But what if they won't settle for money? This brings us to Mike Doyle, who runs tiny Eolas Technology Inc., which controls a patent that covers embedding plug-ins, applets, scriptlets, or ActiveX Controls into Web pages -- the use of any algorithm that implements dynamic, bi-directional communications between an app embedded in a Web page and external applications. That more or less defines how the World Wide Web is used today. As I have written before, Eolas is suing Microsoft for patent infringement, and has been generally wiping the floor with Redmond. Of course, so did the DoJ, and look how THAT turned out. The suit comes to trial in the spring and should be very interesting, not just because of the principles involved, but also because Mike Doyle and Eolas insist they are looking for more than just money. "It would sure be nice for someone to actually consider all of this from our point of view, rather than MS's," wrote Doyle in a recent message to me. "It amazes me that everyone just assumes that MS will be able to merely write a check and make the whole thing go away. What if someone went through the following, purely theoretical, of course ;-), logical analysis?" "Is there any practical settlement amount that is worth more to Eolas than a victory at trial? Considering the facts in the case and the magnitude of the stakes here, a highly likely outcome is that it will actually go to trial, and, once it does, that a jury will award us both damages and an injunction. Injunction is the key word here. That is what patent rights provide: the power to exclude. What if we were to just say no? Or, what if some other big player were to acquire or merge with us? What if only one best-of-breed browser could run embedded plug-ins, applets, ActiveX controls, or anything like them, and it wasn't IE? How competitive would the other browsers be without those capabilities? How would that change the current dynamics in the Industry?" "One possible scenario is that Eolas would have the power necessary to re-establish the browser-as-application-platform as a viable competitor to Windows. That would be an interesting outcome, wouldn't it? How much would that be worth? The Web-OS concept, where the browser is the interface to all interactive apps on the client side, was always a killer idea. It still is. It lost momentum not because it wasn't economically or technically feasible, but because MS made it unlikely for anybody but them to make money on the Web-client side. Therefore, nobody could justify the necessary investment to take a really-serious shot at it. It doesn't have to be that way, does it? Just think of how we could use this patent to re-invigorate and expand the competitive landscape in this recently-moribund industry. What if we could do what the DOJ couldn't, and in the process make Eolas and everybody else, possibly excluding MS, richer? Wouldn't Eolas stand to profit more in such a scenario than any kind of pre-trial settlement could provide? Wouldn't everybody else?" "The last couple of years in IT seem to have convinced people that the current status quo will continue indefinitely. They seem to have forgotten what seemed so obvious as little as three years ago, that change is the only invariance. That axiom has always proven out in the past, and I'm certain it will continue to do so in the future." So will Mike Doyle give in to the Microsoft checkbook or will he opt, instead, to change the world of IT as we know it, knocking Microsoft down to size along the way? And notice how he referred to mergers and investors and being acquired? What if an IBM or an AOL or some party behind door number three was to do exactly that? As I said, it should be a VERY interesting trial. ********************************************************************** For Listserv Instructions, see http://www.lawlists.net/cyberia Off-Topic threads: http://www.lawlists.net/mailman/listinfo/cyberia-ot Need more help? Send mail to: Cyberia-L-Request () listserv aol com ********************************************************************** ------ End of Forwarded Message ------------------------------------- You are subscribed as interesting-people () lists elistx com To unsubscribe or update your address, click http://v2.listbox.com/member/?listname=ip Archives at: http://www.interesting-people.org/archives/interesting-people/
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- Cringely's latest is interesting ... Dave Farber (Nov 13)