Sayings of Chairman Bill

Gates' Microsoft defense is full of holes, but so is the government's breakup plan.

By Scott Rosenberg

May 1, 2000 | To understand how Microsoft got itself in the pickle it currently finds itself in, all you have to do is listen closely to the words Bill Gates offered the world on Friday upon learning of the Justice Department's proposal to bifurcate his company. Regardless of whether you believe Microsoft is an evil monopoly deserving of the harshest government treatment or an exemplary company unfairly targeted on account of its marketplace success, Gates' amazing statements provide an illuminating precis of the duplicity and arrogance that wrecked Microsoft's trial defense and now threaten to place it under the surgical knife of a court-ordered breakup.

Listen to Gates as he rails at the government's proposals: "Microsoft could never have developed Windows under these rules. We couldn't have developed Windows because without the great work of the Office team and the Windows team, it never would have come together."

This statement should cause the jaws of anyone who has followed Microsoft's history to drop. For years the company insisted that the developers of Office's predecessor applications, like Word and Excel, worked in strict isolation from its operating system developers. Separated by a so-called Chinese wall from their operating-system colleagues, the application developers had access only to the same "application programming interface" (API) information that programmers at competing companies knew about. The division, Microsoft president Steve Ballmer declared, was "like the separation of church and state."

Competitors complained that Microsoft kept information about "undocumented" APIs for itself, and that Microsoft programmers exploited special access to the operating system's innards. Microsoft said, "No way!"

Now, Gates says, Windows wouldn't even exist without precisely such cross-team cooperation.

There are several possible interpretations of his statement, none of which get Gates off the hook. If by "rules" he is referring to the proposed breakup of his company, then he's saying Windows' success depends on its "special relationship" with Office, after all; if the "rules" he refers to instead are the interim "conduct" rules the government has proposed, which demand that Microsoft publish its APIs in full, then Gates is saying that Windows' success depends on the very same undocumented APIs it has always claimed do not exist.

Is Gates suggesting that the original versions of Windows, developed in the late '80s and early '90s, were somehow dependent on the "great work of the Office team"? Office per se didn't exist as a total package in those days, of course, but its individual programs faced fierce competition, and these were the days in which Microsoft's "Our applications have no inside track" claims were the loudest. Or perhaps Gates is referring only to the latter-day version of Windows, Windows 95 and 98, which evolved in an era when Office dominated the desktop application market -- but then his statement that "Microsoft could never have developed Windows" is ridiculous, since Windows already existed before it was refined into its 95 and 98 versions.

No matter how you parse it, Gates' comment reeks of doubletalk and doublethink. But don't dare suggest that to him. As he imperiously declared Friday, the government's proposal "was not developed by anyone who knows anything about the software business."

That's right: Microsoft is full of brainy people who understand the software business, and the rest of us peons out here -- lawyers, Justice Department officials, Judge Thomas Penfield Jackson, reporters, competitors and software consumers -- should just clam up and let it do its thing.

Gates' message continues to be: This is our game, and we'll make the rules as we go along. This approach was singularly self-destructive during the antitrust trial, but Microsoft is sticking to its guns in confidence that whatever Judge Jackson decides will be overturned on appeal. And if the appeals courts and the Supreme Court rule against it, well, that will just prove that they know nothing about the software business, too. Microsoft can lose a trial, but it will never lose its sense of superiority.

The saddest thing about this situation is that it proves, in fact, that Microsoft's leaders really aren't very smart after all -- they're victims of their own emotions. Trapped in the psychological bunker of their own corporate culture, they keep driving themselves deeper into their legal hole -- when they could instead be making a reasonable case that the government's proposed remedies are full of holes.

Next Page: Why did the government ignore the one remedy that might work to rein in Microsoft?

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