Under intense public scrutiny, four of the IT industry's top executives presented evidence before a Senate Judiciary Committee hearing on Tuesday. Scott McNealy (Sun), Jim Barksdale (Netscape), Michael Dell (Dell) and Bill Gates (Microsoft) all did what was expected of them.
In the absence of a clear winner of the confrontation, Microsoft's case appeared somewhat strengthened.
In a hearing that was broadcast live on TV, as well as via the Internet, Barksdale and McNealy delivered their well-known criticism of Microsoft's business practices - and Gates offered his usual responses.
Barksdale and McNealy demanded that a broader antitrust case should be brought against Microsoft, for abuse of its monopoly position. This would go beyond the current Department of Justice case, which is merely concerned with whether or not Microsoft violated its 1995 Consent Decree. Barksdale and McNealy also said that the government should enforce existing antitrust law, not impose new regulations.
But before the Senate, both CEOS toned down their usual rhetoric considerably, while Gates did his best to appear as co-operative as possible. In this, he got considerable help from Michael Dell and Doug Burgum (Great Plains Software), who reportedly were added to the panel at his request. On cue, both repeatedly launched into lengthy praise of Microsoft's competitive spirit.
Most of the questions that the senators asked Bill Gates centred around Microsoft's plans for the Internet, and the precise nature of its contracts with OEMs, ISPs and Internet content providers. Barely any mention was made of other issues, such as the way Microsoft has leveraged its operating system dominance to control the Windows application market.
The intricate links between Microsoft's applications and operating system divisions may be of great concern to the software industry, but it is the Internet that has caught the attention of the public - and of the senators.
This was probably an advantage to Microsoft. The issues concerning the Internet Explorer browser - whether or not Microsoft's licensing agreements with OEMs, ISPs and content providers are exclusionary towards other browsers - may appear to be more straightforward than discussions of OS programming interfaces. But they are also relatively easy to address - as was proved by Microsoft's last minute decision to change its contracts with ISPs.
Microsoft has changed the contracts to allow ISPs with which it partners to advertise the competing Netscape Navigator browser. This relatively small concession saved the company some painful questioning on Tuesday - as well as averting possible legal action from the European Commission.
As expected, the hearing most of the time produced little more than soundbites. When it did go further than that, this was often thanks to the presence of veteran industry analyst and columnist Stewart Alsop, who at crucial points provided a much needed reality check.
For instance, after lengthy and repetitive discussions about whether Microsoft does or does not have a monopoly of the desktop operating system market - a point which Gates doggedly refused to concede - Alsop pointed out that the presence of one dominant desktop operating system is in fact, to many people, desirable. "There is a very strong desire and need to have one Operating System on the desktop," he said.
Alsop added that the past 15 years had seen "a competitive process that established Windows as the single standard". McNealy countered that what the industry needed was in fact a set of standard interfaces, not a single operating system - but at this point, the discussion had become too technical for the senators, who dropped the issue.
Gates appeared to answer frankly to most questions. But he was also cornered a couple of times. A key moment in the hearing came when committee chairman Senator Orrin Hatch tried for several minutes to get Bill Gates to answer 'yes' or 'no' to the question: "Does Microsoft limit Internet content providers from advertising other browsers?"
Finally, Hatch left Bill Gates no option but to admit that, yes, there were certain limitations on what content providers can do if they wish to figure in the Microsoft 'Channel Guide', which is a part of the Windows 98 Active Desktop. Gates admitted that these content providers may not advertise other browsers on the Web page which is referenced from the Channel Guide.
But he said this limitation only holds for this one Web page, not for the rest of the site. A bit later, Gates also conceded that content providers who wish to be listed in the Channel Guide, are not allowed to pay to be listed in other company's Channel Guides.
If Hatch proved to be his best briefed and most effective adversary in the Senate, the hearing also demonstrated that Gates also has some powerful friends there - such as Senator Edward Kennedy, who pitched Gates some easy questions.
The hearing provided some rare amusing moments - such as the ironic reversal of roles when Gates, trying to illustrate that Microsoft does not monopolise the desktop, found himself defending the validity of the network computer concept, while McNealy was suddenly downplaying the market chances of the NC and of his own Java OS.
The general impression left by the hearing, is that Microsoft escaped relatively unscathed - and probably strengthened. The very presence of strong and outspoken Microsoft competitors such as McNealy and Barksdale contradicted the image they tried to depict of a market dominated by one player. Also, all parties agreed that there should be no additional legislation to govern the software industry.
And meanwhile, the senators seemed mainly concerned about a number of specific provisions in Microsoft's contracts with OEMs, ISPs and content providers.
They did not respond as much to Netscape's and Sun's more fundamental criticism of Microsoft's monopoly of the IT industry, and the way it stifles innovation. This appears to promise Microsoft the easy way out of voluntarily changing some of its contract provisions - as it just did for ISPs - without fundamentally changing the way it does business.
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