After Antitrust

When the dust settled on the landmark Microsoft antitrust case with an agreement intended to curb the company's abuse of its operating system monopoly, PC users might have cautiously expected a kinder, gentler Microsoft. Eighteen months later, while some legal wrangling continues and Microsoft is under new attack abroad, the agreement seems to be achieving its objectives--though individual users may notice only small changes.

True, Microsoft's operating system and browser (not to mention its office suite, which was not at issue in the lawsuit) are still dominant--a situation that has some observers concerned about a Microsoft "monoculture" that has left most computers, and even the Internet, vulnerable to well-designed attacks such as those by last year's Sobig worm and this year's Mydoom virus.

Although ongoing security problems with Microsoft's products have long since grabbed the spotlight from the lawsuit's main concern--namely, the company's use of its monopoly power to squash competitors--the settlement agreement does appear to have changed Microsoft's business behavior. Rivals in key areas--notably media players, e-mail, instant messaging, and Internet search--are holding their own against their Windows counterparts. Google, for instance, has a 40 percent share of the search market, compared with 30 percent for MSN Search (see "Microsoft and Competitors").

The antitrust ruling also prohibits Windows licensing schemes that make it costly for PC vendors to install operating systems other than Windows on every computer they sell--but this hasn't boosted the overall percentage of desktop computers running Linux (Windows' chief competitor), a number that continues to hover at around 3 percent.

Future Products

But the question remains: Will the 2002 ruling keep the software giant in check?

Many of the categories in which Microsoft has failed to gain dominance--handheld PCs, game consoles, personal finance, and Internet connectivity, for example--involve products not directly bundled with Windows. It's therefore perhaps not surprising that Microsoft's new ventures may be more closely tied to the operating system. The company plans to beef up search capabilities in future versions of Windows, and last year it purchased Romanian antivirus software company GeCAD. Search and antivirus tools are big business in today's online world, but Microsoft says it has learned its lesson: Its future products will fully comply with the antitrust settlement--in these areas and others--and it will not use its operating system ubiquity to put existing search engines and antivirus vendors out of business.

Not everybody buys Microsoft's story. In January, Massachusetts Attorney General Tom Reilly's office filed a brief, warning that Microsoft could be planning a "campaign against various Internet search engines similar to the campaign it previously waged against Netscape's Navigator browser."