Good for Microsoft. Late yesterday, the Department of Justice posted on its website its most recent joint status report regarding compliance with the final judgments entered in the federal government action against Microsoft. The new report describes an agreement by Microsoft to revamp how Vista approaches desktop search. Google has contended that Microsoft’s approach to desktop search in Vista creates a barrier to entry for competing desktop search products. The new agreement should resolve this complaint and facilitate greater competition in desktop search. Good for Microsoft and good for us.
A quick tour through history is in order, as the early press accounts of this dispute read like déjà vu all over again. One of the key contentions during the browser wars was that Microsoft had leveraged its control over the Windows desktop to create distribution barriers for Netscape Navigator. This took many forms, but one straightforward version was the fact that the Internet Explorer icon was locked into place on the Windows desktop. That of course didn’t technically block the installation of any other icon, including one for Navigator, but it did mean that adding an icon for Navigator meant that two browser icons would be on the desktop rather than one.
You might not think that would matter—standard economics says more beats less—but the testimony in the case suggested that consumers found two browser icons confusing. That confusion in turn led to phone calls to Dell’s customer support, and for a business with thin profit margins, a few phone calls chewed up all the profits. Again the evidence in the case suggested that Microsoft knew all of this and indeed may have designed the desktop with entry barriers in mind. This emphasizes the subtle relationship between design and competition policy.
Turn back to desktop search. Microsoft is obviously way behind Google in search, and search is the core feature of whatever we want to think of as an Internet operating system. Google has used search to move towards the desktop, and Google desktop search, a program that I use, is Google’s step towards leveraging its Internet position into a desktop position.
We are not yet running Vista at the Law School but I gather that integrated search is one of its new features. Perhaps too integrated, as Google has contended that Vista’s approach to indexing effectively creates a barrier to entry for Google desktop search. It is that complaint that the joint status report resolves. Vista will be revised when the first service pack is released so as to promote “user and OEM choice for desktop search in Windows Vista.”
This is not your father’s Microsoft. I gather that there is a question as to whether Microsoft has an obligation under the final judgments to make these changes. I have not parsed the text of the final judgments to assess that. But look backwards. The original—and here I mean the original—federal government case against Microsoft related to licensing practices for DOS. That case was resolved with a consent decree which in turn had a clause that barred tying of operating system software but allowed integration.
When Microsoft started bundling—or was it integrating?—Internet Explorer with Windows, a dispute arose about how the precise terms of the consent decree applied. When Microsoft declined to accept the government’s interpretation, the government pursued a contempt order. That case eventually went to the DC Circuit where Microsoft received a favorable 2-1 decision (this is 147 F3d 935 (DC Cir 1998) if you are following at home). But the bigger picture was that Microsoft lost. The government brought a new case relating to the new Windows product and that eventually resulted in the final judgments at stake here.
Microsoft might have gone down the same path here, but rather than engage in more antitrust warfare, Microsoft has chosen to revise Vista to take this issue off the table. Sitting in Hyde Park and not Redmond, that looks like the right business decision.
What does this mean for us, the consumers? If consumers can’t actually handle this choice—the claimed position in the browser war—computer sellers will make it for us. This is an approach to desktop competition and I have advocated before. Different sellers can take different positions.
As I understand the resolution, Windows desktop search will be present, but will be relegated to a low priority for system resources if another program has been installed as the default desktop search program. That means that Windows desktop search will be installed everywhere and the question is whether that ubiquity will be an advantage. That ubiquity idea is exactly what has driven the European Union in its action against Microsoft for the Windows media player (I discuss this in greater detail here). That in turn depends on the idea that only a limited number of formats will be supported by content makers and that they will tend to support formats with the greatest distribution. I don’t think there is that issue with regard to search, and if that is right, we shouldn’t be nervous about greater ubiquity for Windows desktop search.
I will not be surprised if some commentary regards this as a sellout, even if an understandable one, by Microsoft. This will be described as design by committee, and worse, with the government sitting at the head of the table. We also will be described as having gone European—better wine perhaps but more stale smoke—in having competitors initiate government-mandated product changes.
I don’t share that view. I thought the DC Circuit did a good job of sorting through the interaction of design and competition policy in Microsoft III (373 F3d 1199 (DC Cir 2004) (en banc)). The latest joint status report continues the work that was done there and should allow desktop competition to move forward.
[Disclosure: The Law School has received grants from Microsoft in the past and, I believe, continues to do so. I have also attended conferences funded in part by Microsoft.]