Microsoft's Fatal Error | The Nation


Microsoft's Fatal Error

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Judge Thomas Penfield Jackson's factual findings in United States v. Microsoft, released November 5, spell the doom of Microsoft as we have known it. Forget what you hear about "might change on appeal." Judge Jackson's legal conclusions, which he hasn't yet announced, will be subject to very careful appellate review all the way to the Supreme Court, if Microsoft wants to go there. But no one is likely to mess with his facts. The trial judge is the one who hears the witnesses, and higher courts respect the difference between live evidence and the cold record too much to change his factual findings. Those facts can be used against Microsoft in other litigation, of which there will soon be plenty, without having to be proved all over again.

About the Author

Eben Moglen
Eben Moglen, professor of law and legal history at Columbia University Law School, serves without fee as general...

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Eben Moglen has been
representing parties sued by the recording industry and is working on a
book about the death of intellectual property.

The recording
industry has been celebrating the supposed defeat of Napster. The
Court of Appeals for the Ninth Circuit has affirmed the grant of a
preliminary injunction that may well have the effect of closing the
service down completely and ending the commercial existence of
Napster's parent (that is, unless the record companies agree to an
implausible deal Napster has proposed). But despite appearances, what
has happened, far from being a victory, is the beginning of the
industry's end. Even for those who have no particular stake in the
sharing of music on the web, there's value in understanding why the
"victory"over Napster is actually a profound and irreversible
calamity for the record companies. What is now happening to music
will soon be happening to many other forms of "content" in the
information society. The Napster case has much to teach us about the
collapse of publishers generally, and about the liberative
possibilities of the decay of the cultural oligopolies that dominated
the second half of the twentieth century.

The shuttering of
Napster will not achieve the music industry's goals because the
technology of music-sharing no longer requires the centralized
registry of music offered for sharing among the network's listeners
that Napster provided. Freely available software called OpenNap
allows any computer in the world to perform the task of facilitating
sharing; it is already widely used. Napster itself--as it kept
pointing out to increasingly unsympathetic courts--maintained no
inventory of music: It simply allowed listeners to find out what
other listeners were offering to share. Almost all the various
sharing programs in existence can switch from official Napster to
other sharing facilitators with a single click. And when they move,
the music moves with them. Now, in the publicity barrage surrounding
the decision, 60 million Napster users will find out about OpenNap,
which cannot be sued or prohibited because, as free software, no one
controls its distribution and any lawsuits would have to be brought
against all its users worldwide. Suddenly, instead of a problem posed
by one commercial entity that can be closed down or acquired, the
industry will be facing the same technical threat, with no one to sue
but its own customers. No business can survive by suing or harassing
its own market.

The music industry (by which we mean the
five companies that supply about 90 percent of the world's popular
music) is dying not because of Napster but because of an underlying
economic truth. In the world of digital products that can be copied
and moved at no cost, traditional distribution structures, which
depend on the ownership of the content or of the right to distribute,
are fatally inefficient. As John Guare's famous play has drummed into
all our minds, everyone in society is divided from everyone else by
six degrees of separation. The most efficient distribution system in
the world is to let everyone give music to whoever they know would
like it. When music has passed through six hands under the current
distribution system, it hasn't even reached the store. When it has
passed through six hands in a system that doesn't require the
distributor to buy the right to pass it along, it has already reached
several million listeners.

This increase in efficiency
means that composers, songwriters and performers have everything to
gain from making use of the system of unowned or anarchistic
distribution, provided that each listener at the end of the chain
still knows how to pay the artist and feels under some obligation to
do so, or will buy something else--a concert ticket, a T-shirt, a
poster--as a result of having received the music for free. Hundreds
of potential "business models" remain to be explored once the
proprietary distributor has disappeared, no one of which will be
perfect for all artistic producers but all of which will be the
subject of experiment in decades to come, once the dinosaurs are

No doubt there will be some immediate pain that will
be felt by artists rather than the shareholders of music
conglomerates. The greatest of celebrity musicians will do fine under
any system, while those who are currently waiting on tables or
driving a cab to support themselves have nothing to lose. For the
signed recording artists just barely making it, on the other hand,
the changes are of legitimate concern. But musicians as a whole stand
to gain far more than they lose. Their wholesale defection from the
existing distribution system is about to begin, leaving the music
industry--like manuscript illuminators, piano-roll manufacturers and
letterpress printers--a quaint and diminutive relic of a passé

The industry's giants won't disappear overnight,
or perhaps at all. But because their role as owner-distributors makes
no economic sense, they will have to become suppliers of services in
the production and promotion of music. Advertising agencies,
production services consultants, packagers--they will be anything but
owners of the music they market to the world.

What is most
important about this phenomenon is that it applies to everything that
can be distributed as a stream of digital bits by the simple human
mechanism of passing it along. The result will be more music, poetry,
photography and journalism available to a far wider audience. Artists
will see a whole new world of readers, listeners and viewers; though
each audience member will be paying less, the artist won't have to
take the small end of a split determined by the distribution
oligarchs who have cheated and swindled them ever since Edison. For
those who worry about the cultural, economic and political power of
the global media companies, the dreamed-of revolution is at hand. The
industry may right now be making a joyful noise unto the Lord, but it
is we, not they, who are about to enter the promised land.

The facts now proven are that Microsoft monopolized a critical piece of the market for computer software: the operating system for Intel-based personal computers--that is, virtually all non-Macintosh PCs. Microsoft, Judge Jackson found, tried to control the "applications program interfaces," or APIs, which are the rules programmers follow to get necessary services from the computer's hardware or (most significant) from the Internet. Every program written to accomplish some real purpose--like balancing a checkbook or playing music or news from the World Wide Web--must communicate with the actual computer hardware and with the network beyond. For these purposes it uses someone's APIs. Microsoft tried to make sure that the only APIs available were those in Windows. Control of the APIs, Judge Jackson held, meant that Microsoft could indefinitely exclude any competing operating system, thus allowing Microsoft to charge higher prices than it would have been able to charge in a competitive market. To maintain control of APIs, Microsoft had to eliminate products, like Netscape's Internet browser, that threatened to take over some tasks performed by the operating system. The "browser wars," Judge Jackson determined, were part of a larger strategy by Microsoft to use its monopoly power to protect its monopoly position.

So this isn't a marginal case brought by a Justice Department antitrust division stretching to make new law. The facts Judge Jackson has found are central to the most straightforward purposes of the Sherman Antitrust Act: to prevent firms that acquire monopoly power from abusing that power to protect themselves against competition. Though he has not yet announced his conclusions of law, his findings of fact make it evident that Microsoft has violated our most basic antitrust law in the most serious ways possible.

Judge Jackson will spend several weeks polishing his legal conclusions, during which time the parties can attempt a settlement. But this they will do in private, and in the meantime public attention should be shifting to the question of remedy. Microsoft has been guilty of serious misdeeds against our competitive economic system; how shall we as a society respond?

Microsoft, the New York Times reported on November 7, has begun making heavy contributions to both political parties and hiring a stable of public commentators, including at least one law school dean. If true, these reports will shed light on much of the rhetoric you're about to hear in the remedy debate. "We must prevent," the hired talkers will say, "too much government interference with private business arrangements. Don't break up Microsoft, or other innovative corporations will be next." This is the same as saying that if you punish people who beat up old ladies for their Social Security checks, you will soon be jailing grocers. People who play by the rules don't get accidentally charged with antitrust violations on this scale.

But the hired talkers do have one point: We won't need drastic remedies to fix the Microsoft mess. Antitrust remedies don't have to be about punishing misbehaving competitors if there is a better way to restore competition. As Judge Jackson makes clear, the basic problem is that Microsoft hasn't had any viable competitor in the operating-systems business. But if he crafts the right remedy, it could have one very quickly: Linux. This free-software operating system, Judge Jackson recognizes, was built by tens of thousands of volunteers worldwide, has millions of users and runs sophisticated server computers at least as well as Windows NT.

To make Linux a full competitor with Windows would require small changes in Microsoft's rules for dispensing information about how others' programs use the Windows APIs. If those and similar legal and technical obstacles are removed, Linux-based systems would be able to run all programs written for Windows computers. Existing users could switch operating systems without changing the programs they use every day. As Judge Jackson found, there is no alternative competitor on the horizon anywhere close to achieving that level of compatibility with Windows.

Microsoft would then be competing on a level playing field with an organization of volunteers and commercial distributors who would have a higher-quality, completely compatible product everyone could get free. That's the kind of competition that would really benefit consumers. The end of the Microsoft Era can be the beginning of the Age of Open Software, in which programs will work better, cost less and develop in innovative new ways faster than ever before. That's the sort of outcome antitrust law is designed to achieve.

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