Eight Years Later, Is Microsoft Still a Monopoly?

Eight years ago this week, Judge Thomas Penfield Jackson of the U.S. District Court of Washington, D.C., officially declared Microsoft a monopoly. These days, the company is still fighting, and losing, antitrust cases, though mostly in Europe. But it's hardly the all-powerful colossus it was when Jackson made his decision.

So is Microsoft still a monopoly, using its ubiquitous operating system to squash the competition? Or is it turning into a toothless giant overshadowed by competitors such as Google and Apple?

I should note at the outset that I'm not a lawyer and I haven't talked to any lawyers about this topic. I'm less interested in the narrow legal case of whether Microsoft violates antitrust law than in the state of Redmond's power. Does it still carry a big enough stick to make the rest of the technology market cower?

The PC Market

You could certainly argue that in one area directly addressed in the antitrust suits--Microsoft's alleged use of the demand for the Windows operating system to affect what PC vendors include on their machines--the company still wields an awful lot of power. Sure, Dell now sells PCs loaded with Linux, as do HP, Lenovo, and other PC vendors. But sales of those non-Windows systems are still paltry. And though Apple's sales of its Macintosh notebook and desktop PCs were up 34 percent last quarter compared to the same period last year, that doesn't mean much to HP, Dell, or other PC vendors. Their livelihood is still tied to selling Windows boxes.

But whether because of the antitrust suits or because of other market factors, Microsoft doesn't seem to be using its power to muscle competitors off the desktop. The very fact that Dell is selling Linux machines at all is one example. And when I recently bought a Dell desktop for home use, it came preloaded with products from two of Microsoft's most formidable competitors--Google's desktop search service and Mozilla's Firefox.

Windows in Decline?

Trends suggest that the power of Windows may decline over the next few years. Most reviewers of Apple's new Leopard operating system have noted that it's superior to Windows Vista. And as virtualization products such as Parallels make running Windows software on a Mac seamless, individuals, at least, probably won't feel as tightly bound to the Windows platform.

Long-term, however, the greater threat to Windows' continued dominance is probably the Internet itself. As so much of our work--sorting through e-mail; finding information; organizing our lives; creating documents, spreadsheets, and other files--migrates online, the Internet becomes in effect everyone's operating system. What makes any particular PC that you happen to be sitting in front of run becomes less and less important.

Office Hegemony

In other software areas, Microsoft's dominant position is similarly threatened. Corporations will probably continue to use Exchange and Outlook for years to come, but do individuals need Outlook anymore? A Gmail or Yahoo Mail inbox is virtually as powerful and as fast, and it's available anywhere.

Though I still use Word, Excel, and PowerPoint to create complicated documents, I find online alternatives like Google Docs more useful for simple jobs like writing documents that don't need much formatting, or opening an e-mail attachment for quick review. When someone sends me a spreadsheet and says, "Take a look and let me know what you think," I don't want to wait around while Excel slowly opens, and then locate the appropriate folder to house that spreadsheet on my hard drive. With Gmail, I can open spreadsheet attachments quickly in Google Docs--and it's still available in the same place if I need to refer to it days or weeks later.

As online applications become more and more powerful, the role of Microsoft Office will inevitably decline. And if Microsoft has a winning strategy to get its own piece of the movement toward online apps, that fact certainly isn't obvious from such confused and ineffective efforts as Windows Live and Office Live.

Net Vulnerability

All of this points to Microsoft's great glaring weakness: the Web. Redmond has never come to terms with the Web, and perhaps it never will. Do a Google search for "Microsoft Internet strategy," and even the first page of results will leave no doubt that the company has had lots of them: .Net, the Live concept, Web TV, Internet appliances, and more. But you won't see a bonafide winner.

On the Web, Microsoft's institutional mass--the thing that makes it a potential monopoly--doesn't help, it hurts. Despite having only a tiny fraction of Microsoft's resources, Zoho has managed to build a stable of online apps that are light years ahead of any Web programs from Redmond .

So what do you think? Is Microsoft still pushing companies around, or is no one afraid of the Big Bad Wolf anymore?