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The legacy of Microsoft's 1994 consent decree

Ina Fried CNET News.com

Published: 13 Jul 2004 16:00 BST

News.com: What was the thinking at the time the 1994 accord was reached?

Bill Neukom: I think the government thought its job was to try to ensure there was a market for the licensing of desktop operating systems going forward. The government's role was to make sure that the marketplace environment provided adequate opportunity for competition.

But Microsoft still dominates the OS market.

I think the result that Microsoft's operating systems continue to be very popular with OEMs (computer makers) and their customers has to do with the technology that was offered in those operating systems. I think what happened in terms of the shakeout with DOS, OS/2 and Windows had to do with competition on the merits of technology and price.

Before the consent decree was reached, Microsoft had disputed the notion that it held monopoly power.

There are no barriers to entry in the technology industry. It's not like owning a quarry or a forest. Besides, having a monopoly in and of itself is by no means illegal. It doesn't mean you are a bad company. It means you are a successful company.

What do you make of criticism of the 1994 consent decree -- that it did not go far enough?

I don't think of the 1994 consent decree as broadly criticised. I think competitors often have complaints about what their competitors are doing. You don't have to watch the NBA finals to know that the referee often gets an earful of complaints. The criticism is more from competitors. I don't think it's from OEM customers. Regulators listen to customers, not competitors, and the customers were not complaining.

Why is it that Microsoft is able to reach settlements now that weren't possible in the past?

I think there is something to be said for Scott McNealy's comments where he said, "We finally listened to our customers." Key managers in leading companies in information technology are more likely to work together now to try and find common ground than to pick a fight with a rival. I think that is a sign of maturity. Microsoft is more mature. I think the industry as a whole is more mature.