In Gates's Web
Microsoft's power could make ethics a dead letter
Command your PC, driven by an older version of Windows, to take you to Microsoft's "Carpoint" site, Bill Gates's "complete source for car buying" on the World Wide Web. Next, click on "Interactive Classifieds" to shop for a new car. But wait: Suddenly, you are told that access is denied unless your computer's operating system is upgraded to Microsoft Windows 95 or Windows NT.
A Web surfer using a browser made by rival Netscape encounters a similar caveat when accessing Microsoft's "Music Central": "You must be running Microsoft Internet Explorer version 3.0 or later."
A Justice Department antitrust action accuses Microsoft of using such "push" tactics to force computermakers to install its Explorer Web browser, along with Windows, on new machines. This coercive marketing hardly advances open competition.
The case of Bill Gates and Microsoft goes well beyond compelling consumers to abandon Netscape for Microsoft Explorer. The question is whether Mr. Gates shall be the sole gatekeeper of commerce on the World Wide Web. Are we headed toward a digital oligopoly, in which free-market rhetoric camouflages the reality of monopoly? Will Gates dictate the rules of access and control of information, money, and power in the Information Age?
Consumer advocate Ralph Nader says, "Information is the currency of democracy." Will it flow freely, or be subject to some value-added surcharge as the price of admission to the information revolution?
The issue was addressed by an extraordinary two-day conference in Washington recently, which ratified an unlikely alliance between Mr. Nader and a coalition of computer firms bent on limiting Gates's power to make or break PC makers, software writers, and content providers. Scott McNealy, chairman of Sun Microsystems, said: "Are we going to write two checks every year, one to the IRS and another to Bill Gates?"
Microsoft spins off $1 billion in cash every month. Its operating systems, MS-DOS and Windows, are the engines of 90 percent of the world's 250 million PCs. Gates receives a royalty fee on each PC, whether it uses a Microsoft operating system or not. Users find it convenient and comforting to have Microsoft's software - like Word, Office, and Excel - bundled with their operating systems.
Most developers, therefore, are forced to write their software for Gates's standards, rather than the open "architecture" of Unix or the more versatile Java machine languages. They also must submit to his licensing terms.
Control of the desktop is the secret to dominating the digital economy. Gates gives his own Web sites favored position on his browser pages. He creates a welter of these sites where sellers meet buyers. His stated aim is to collect a percentage of every commercial transaction on the Internet.
His "Carpoint" Web site links dealers with shoppers. "Expedia" delivers would-be travelers to travel agents. "Boardwalk" displays the listings of realtors to home buyers. "Sidewalk" co-opts the services of local newspapers in targeted communities, including lucrative classifieds.
Gates is moving into Internet investing and banking, to the chagrin of the 10 largest bank holding companies in the US. They say they find it intolerable for Gates to set the standards and collect fees "while we take the risks." Gates has Web junctions for news and information, movies, music, investment, and cross-promotion of all his links. Surely, his success should be rewarded. But by how much?
Gates confronts accusations ranging from brute force and rascality to intimidation and retaliation. A court suit documents allegations that Microsoft used false "error" messages to make it appear that a rival operating system, DR-DOS, was incompatible with Windows. That helped drive DR-DOS out of the market.
YET government antitrust efforts are narrowly defined, under-funded, and slow to deal with Microsoft's assault. They fail to address whether Microsoft's software activities should be split from its distribution and content enterprises; whether the Internet standard should be proprietary or open to competitors; whether antitrust statutes written in the age of heavy industry should be updated for the needs of digital commerce and culture.
A participant at the Nader conference asked whether Microsoft can operate as an "ethical company." Indeed, the Microsoft case raises the important question of whether business ethics - tempering laissez-faire aggressiveness with social need, fairness, and responsibility - can operate in this anything-goes environment.
* Jerry M. Landay writes on media and democracy issues from Urbana, Ill.