Legal questions aside, when one asks if Microsoft is a monopoly, the only appropriate response is another question: In which markets? Through whatever means, Microsoft is deeply involved in every aspect of the computer software market. As of late 1997, the company controls the operating system of more than 94 percent of all personal computers sold everywhere in the world. In 1995, Microsoft’s word processing application, Microsoft Word, commanded just over 33 percent of the market; by 1997 Microsoft Word’s market share had grown to more than 80 percent. International Data Corporation analysts report that more than 65 percent of all new intranets run on Windows NT, and the market penetration of Microsoft’s Windows NT Workstation software is growing at the annual rate of 177 percent.
For years Microsoft’s competitors have floated various proposals to dismantle the software giant, mostly in the name of fair competition and a level playing field. In late 1997 and early 1998 the tone of these proposals changed in an important way. Previously, the proposals were floated anonymously or at least very quietly, usually behind the scenes. By the late 1990s, however, practically every high technology executive seemed to be publicly calling for Microsoft’s corporate head on a virtual pike and taking their proposals to any federal regulator willing to listen.
In early April 1998, the New York Times reported that the Justice Department was not considering breaking up Microsoft, but was said to be considering a range of other possibilities. According to the New York Times article, computer industry trade associations reportedly made ten proposals, including:
- Force Microsoft to divest its operating system business from its applications businesses.
- Force Microsoft to honestly disclose and document the parts of its operating systems to which its programmers have access.
- Prohibit Microsoft from tying new software products to its operating systems.
Microsoft dismissed the proposals as a “wish list with no basis in the facts of this industry or the laws of this country,” and indicated that there was no reason to believe that any scenario would delay the release of the Windows 98 operating system by the company’s targeted June 25, 1998 release date.
On April 11, 1998, the Los Angeles Times reported that it had uncovered an elaborate Microsoft plan to put its corporate spin on the Justice Department’s investigations of the software company’s business practices. The plan, according to confidential Microsoft documents obtained by the Los Angeles Times reporters, called for the planting of news articles and opinion pieces commissioned by Microsoft’s public relations firms in local newspapers across the country. The articles and editorials would reportedly be presented as “spontaneous testimonials” indicative of a groundswell of grassroots support for Microsoft.
The Microsoft plan was highly targeted, aimed at news outlets in the twelve states that are considering antitrust actions against the software company.
At first, Microsoft spokesperson Greg Shaw, denied he was aware of the plan. When informed by the Los Angles Times journalists that his name appeared throughout the confidential documents, Shaw acknowledged the plan but dismissed it as a dead proposal. The status of the plan was contradicted by Los Angeles Times sources who said it was presented as an active objective to Microsoft’s regional public relations firms. The plan called for the planted stories to be followed with studies and surveys designed to illustrate Microsoft’s impact on each state’s regional economy.
Within days of the Los Angeles Times story, Microsoft began its uncommon public relations onslaught in earnest. Newspaper ads posed as unsigned editorials that painstakingly explained why government regulation of Microsoft would be bad for the company, but even worse for America. The keystone of Microsoft’s campaign appears to be the concept of innovation. “At Microsoft, the freedom to innovate for our customers is more than a goal, it is a principle worth standing up for,” read the warm and fuzzy marketing copy cloaked as editorial.
Ironically, Microsoft is widely disparaged within the computer industry as not innovative at all. Rather, the software behemoth is almost universally seen as an excellent marketing organization that acquires innovation instead of developing it. Many Microsoft detractors readily point out that the company is best seen as a consolidator of technology products.
Microsoft’s ad campaign states that innovation “results from a spirited competitive environment….” But just how competitive is Microsoft’s environment? Most small, innovative software companies are shuddering in fear; or spending imaginary profits at the whiff of a mention of Microsoft interest in either the company or the market segment within which they operate.
Most disturbing of all, the practice of planting news articles and opinion pieces presented as a groundswell of grassroots support isn’t even a Microsoft innovation or invention. It’s not even new. It’s been happening for so long that political flacks even have a code name for it: “Astroturf lobbying.”
In early May 1998, Microsoft followed up with a letter signed by its manufacturing partners, predicting all sorts of famine and pestilence if the software giant were prevented from releasing its Windows 98 operating system on schedule.
