Although the legal issues in the case won’t be resolved for some time, one thing is clear: the government’s plan to dismantle Microsoft and subject the remains to harsh regulatory constraints would cripple Microsoft’s ability to innovate on behalf of consumers and could undermine the future success of America’s high-tech industry.
The proposal would put government lawyers and the courts in the position of deciding what new innovations will be allowed in Microsoft software. Yet, as the U.S. Court of Appeals already ruled in a previous government case against Microsoft, subjecting companies to prosecution for building products with new features threatens to chill technological innovation. Consumers and the marketplace–not the government– should determine what features go into software products. The government’s proposal would also force Microsoft to disclose to its direct competitors confidential intellectual property that Microsoft has invested billions of dollars to create over many years. Our competitors would be under no obligation to share any of their intellectual property. Under the government plan, computer manufacturers would be allowed to modify the Windows operating system, removing or hiding features as they see fit. This would destroy the primary value of Windows, which is to provide users with a consistent operating system that works the same way on any computer. The government plan would lead to the “balkanization” of Windows, which would result in incompatibilities between programs and make computers harder to use. The government proposal would flatly ban any improvements to Internet Explorer. It would, for all practical purposes, prohibit the addition of any significant new features to Windows for up to 10 years. This would be a major setback not only for Microsoft, but for consumers; our efforts to create a new generation of PCs that easily recognize speech, handwriting and even gestures would be effectively shut down for a decade.
By dividing Microsoft’s software-engineering teams into different companies, the government’s proposal would retard our ability to develop innovative new software. Over the years, a wide range of great features have started within the applications divisions, then moved into the operating system so they could be used by thousands of other companies–but the government’s plan would make that impossible. The plan extends well beyond personal computers–it would severely set back Microsoft’s development of innovative new products now under development, including new versions of Web TV, the X-Box game console, the Pocket PC, an “eBook” reader and a tablet PC device for knowledge workers.
While the government has tried to point to the AT&T divestiture to support its breakup proposal, the two situations are apples and oranges. AT&T was a government-regulated monopoly that agreed to a voluntary breakup in order to end decades of heavy government regulation. Microsoft and the broader personal-computer industry have created tremendous value for consumers without any government regulation; now the government is proposing an unprecedented breakup and unprecedented regulation affecting America’s most competitive industry.
We have worked hard to try to resolve this case through a settlement, and we will abide by whatever ruling the courts ultimately hand down. But we believe there are important principles in this case that are worth standing up for. As we work to resolve this case, we will continue to focus on developing great software that brings the power of computing to people in all walks of life.
