US District Judge Thomas Penfield Jackson has ordered Microsoft split into an operating systems company and an applications company (with browsers considered an application). They will be barred from joint ventures and favored cross- licensing or information sharing for a number of years. Microsoft will appeal. [WSJ, 08Jun00. NewsScan.]

Although Microsoft argues that its standards and innovations are good for the consumer, Judge Jackson favors letting competitors also innovate. Companies exist that can compete with pieces of Microsoft, but none can compete with the full monopoly. An alternative would be to declare Windows computing a utility -- similar to phone or postal service -- to be regulated by the government.

Analyst Mark R. Anderson has predicted that Microsoft stock will go up after the ruling, and that the company is poised to grow much larger. (He also predicts a good year for Dell and Apple, and for other tech companies.) He also predicts that the decision to split MS will be reversed on appeal. Even if split, this is not a company in trouble. Microsoft has $42B in cash and securities, and earned over $7B last year. (Some of that money *could* be used to buy back MS stock, which would boost the stock price.) MS has just announced a $2B three-year budget to entice and educate independent software developers for the Next Generation Windows Services platform. (That's 20 times the marketing budget for Windows 2000.) MS also has in-house R&D in excess of this amount every year. Once NGWS profits kick in, earnings could grow even faster -- to maybe $200B or more in cash after another six years. On another tack, MS has been buying into both cable and telecom technology in North America, Europe, Japan, and South America. Wall Street has been ignoring this. "Someday, people will look back at the company as it is today and marvel at how small it was, when all it did was PC software." [, SNS, 07Jun00.]

----- "Clearly, MS's dominant status allows it to pick winners and losers. And they get to bind users to their platform. And they get to co-opt open standards. And they get to manipulate other people's innovations. And they get to sell millions of copies of buggy mission-critical applications. And they get to knock off other people's innovations and fold them into their platform. And they can block interoperability with their platform. And they get to plug security holes on an as-needed basis. And so on... This is unfettered competition?" -- Joe Seither. [SNS, 07Jun00.] -----