>Dan Gillmor, Tech Columnist at the San Jose Mercury News, provides

>insightful analysis on the Silicon Valley technology and business

>revolution and it's global and personal impacts. His column appears

>every Sunday, Tuesday, and Friday. Dan has been following the

>Microsoft antitrust litigation since its inception and has devoted

>numerous columns to it.

After a good joke about his new startup that is anticipating a "liquidity event," he started into the topic at hand. In the Government vs. Microsoft battle, everybody but Microsoft can clearly see that Microsoft is losing badly at this point in time. The company is currently before a judge in Chicago whom both Microsoft and the Government have reason to fear. There is some chance that arbitration will lead to a settlement, but it is more likely that the appeals process for Judge Jackson's rulings will be dragged out for quite a long time before the matter is settled.

Gillmor was surprised by some of the things that happened during that trial. For example, he described sitting in the courtroom watching Bill Gates testifying on videotape. He characterized the situation this way "Bill Gates poisoned his company's chances with his testimony." One of the problems was that the guy tried to split hairs. Another was that he said some things that were just not believable. Since Judge Jackson is quite aware that the case will be appealed, Gillmor expects that the Judge will write his rulings in the most appeal proof possible way.

There have been several other antitrust suits against Microsoft, but none have brought to light the issues of the company's structure that might change it's course. The one that might have come close was the suit brought by the DRDOS people. During the early 1980s, it was a competitor to MSDOS, but Microsoft killed it by adding some questionable code to their applications. Microsoft settled the suit for what could have been as much as $250,000,000.00, and the issues involved still need a public airing.

Gillmor feels that the key to understanding Microsoft is that for the most part it really is a very good company. They really do try to hire the best, give them free reign, and let the market decide what succeeds. The few really questionable things are for the most part top down, and they are less there than they are in most big companies. Microsoft is beginning to be affected by the same brain drain that is affecting most big companies, in that their stock price doesn't have the kind of growth potential that starting a new .com company has at this point in time. It is not clear what the effect of breaking up the company would be on this.

One of the keys to understanding Microsoft's relationship with the market is that the consumer benefits from the company's de facto monopoly on the operating system marketplace. The questions of compatibility across platforms are addressed by the phrase "Microsoft compatible." This means that a framework for consumer choice is provided for. Another key is that the incremental cost to Microsoft of another copy of Windows is zero. This means that the operating system is a cash machine that is unprecedented in human history. Taken together, these factors explain a lot of the company's momentum.

Tian Harter