Big Heads, Big Trouble

Arrogant and stupid is a dangerous combination. In war, it can get lots of people killed. In business, where many like to use the metaphors of war, it can lead quickly to bankruptcy. I never thought I would use those adjectives to describe Bill Gates, but the events swirling around Microsoft’s anti-trust soap opera leave no other choice.

Microsoft claims it is fighting to defend its freedom, and the freedom of other companies, to innovate. Microsoft further claims that the court ordered remedy will destroy Microsoft, hurt the competitiveness of US industry, and be really bad for everyone.

As we politely say in the Midwest, hogwash! Gates got a little too big for his britches, and now the government and the court will take him out behind the woodshed and give him a well deserved spanking.

If Gates and company were so interested in innovation, why did they force hardware vendors in the DOS era to pay royalties to Microsoft for all PCs they sold -- even those PCs that did not have DOS bundled? Why did they put code in applications that made them break when run under DR-DOS, a competing operating system? Why did they price discriminate against IBM and other vendors who built OS/2 and other competing products? Why did they wait until Netscape became a threat to bundle Internet Explorer with Windows 95/98? Why did Microsoft executives lie to the court by cooking their videotaped demos?

The trial painted a dark picture of Microsoft. Instead of defending innovation, Microsoft threatens innovation when it does not benefit Microsoft. Having won the desktop operating system battle, Microsoft now wants to profit from every piece of data and every transaction that takes place in business. Gates and company seem to believe that the world will roll over and let them do it.

That covers the arrogant part, but what about the stupid part? Microsoft gambled that the government could not muster the technical knowledge to intelligently argue its case. To the government’s credit, Department of Justice lawyers demonstrated surprising technical knowledge as they uncovered Microsoft’s lies throughout the trial and exposed Microsoft’s clumsy attempts at cooking videotaped demos. Microsoft’s stock lost roughly half its value over this affair. For the first time in their young lives, lots of Microsoft employees, who receive much of their compensation in stock options, will get an opportunity to learn about economic adversity. Think about how many talented employees Microsoft will lose now that the gravy train of ever increasing stock value is stopped dead in its tracks. Think about the damage to Gates’ carefully crafted reputation as a software and business genius as his life’s work implodes around him. It all follows Microsoft's stupid trial strategy, brought on by arrogance.

Nothing positive can come to Microsoft from this. Unless Gates and his legal team have some supernatural ability to persuade the appeals court and Supreme Court to immediately repeal the district court decision, Microsoft is looking at several months, and most likely years, of courtroom battles. Even if Microsoft wins, it will lose because it’s entire product strategy will depend on the outcome of upcoming court battles.

I’m just a skinny bald guy from Minnesota, but it seems to me the picture around Bill Gates is awfully ugly right now. The saddest part is it didn’t have to be this way. Gates could have settled at any point along the way and crafted a scenario where everyone wins. Microsoft could have offered source licenses, built Windows into a genuine open standard, and collected royalties from all over the world. Instead, Gates thumbed his nose at the court, at his customers, and at the public, pursuing a reckless gamble he thought he could win.

We can only speculate as to why Microsoft chose this strategy. Perhaps some inside economist calculated that instead of making Windows an open standard, it would be even more profitable to keep Windows proprietary so Microsoft would have inside knowledge of its own operating system and gain an advantage with applications. Although the IT industry is littered with the dead and dying remains of such bone-headed calculations, Microsoft used to do a wonderful job of learning and profiting from others mistakes. Why would it repeat such an obvious fatal mistake now? The most likely explanation is arrogant and stupidity, bought on by unprecedented success in years past.

Microsoft can still settle this thing, can still make Windows an open standard, and can still create a scenario where everyone wins. The challenge for Bill Gates will be to swallow his pride and do the right thing. --Greg Scott, Microsoft Certified Systems Engineer (MCSE), is Chief Technology Officer of Infrasupport Etc. Inc. (Eagan, Minn.). Contact him at