Power game

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The Court of Appeals decision which led to the Justice Department’s retreat in its war to break up Microsoft is a clear winner for small businesses around the globe.

Had Microsoft been split into two pieces, an operating systems piece and an applications piece, small business would have had twice as much interaction with the Redmond, Wash., giant.

Both small business users of Microsoft products and small business developers of Microsoft compatible software, hardware or middleware would have been affected. They would have found themselves in the unenviable position of dealing not only with one 800-pound gorilla with monopoly power over operating systems, but also with a second such gorilla with enormous applications clout.

Overnight, Microsoft’s 100,000-plus worldwide business partners would have had to renegotiate their relationships with two new “baby-soft” companies. Accounting systems, contracts and management systems would have had to be analyzed and adjusted. Each time an application was licensed, the partner would have needed compatibility assurances.

Since the original order forbade employees from one side having any “inside” dealings with the other, negotiations would have taken twice as long and cost twice as much.

Good for contract lawyers but bad for small business.

The order also would have allowed Microsoft’s operating system to lose its uniform look, feel and functionality. Not a problem for a small number of highly sophisticated end users, but the vast majority of small businesses are willing to sacrifice a little flexibility for a uniform, consistent user experience, which makes recruitment, training and day-to-day operations easier.

Some of the order’s findings will be useful to small business developers. The Court of Appeals upheld the lower court’s findings that Microsoft had a monopoly over PC-based operating systems. It is likely that the new district court judge will fashion a remedy which will make small business developers’ access to critical Application Protocol Interfaces easier and more democratic than it had been pre-lawsuit.

In the end, both sides in this dispute will be able to claim “victory.”

Harvey S. Jacobs ([email protected]) is the managing director of Jacobs & Associates, a Washington, D.C.-based Internet law firm serving small business engaged in the sale of their goods or services via the Internet.