In 1998, Microsoft did something that was widely protested: it tied its browser software to its operating system. This was part of Microsoft’s strategy to dominate the browser software market, and the trigger for a massive lawsuit by the U.S. government and many states against the software giant on antitrust grounds. While that suit was sabotaged in the end, a similar action is now entering a promising phase in Europe–but must first withstand similar attempts at sabotage. First, a bit of background.

Let’s go back in time a little. The first event of note happened at the beginning of the 80’s, when the Apple ][ computer dominated the PC market. IBM wanted to do that, so they created a new computer, the “IBM PC,” that would do the trick. When they went looking for an OS, they turned to Bill Gates, who was doing other work for them. Gates bought an operating system, Q-DOS, from another firm for $50,000 and presented it to IBM with the new name “MS-DOS” slapped onto it. But Gates did not want to simply sell it to them for a quick profit; he wanted to license it to them, allow them to include it with their computers for a fee, with Gates retaining ownership. IBM execs decided that the computer hardware was where the money was, and so they agreed with Gates’ request. That is now remembered as one of the most idiotic decisions in recent business history. Microsoft based their success on the ownership of that operating system.

One thing should be noted about Microsoft, and that is their quick & dirty approach to capturing a market. When a competitor comes out with software which Microsoft wants to dominate, it produces its own version as quickly as possible. The product is, at first, of extremely poor quality, and only becomes truly workable after several upgrades. One example of this is Microsoft’s operating system itself.

In 1993, when Apple released the Lisa (the precursor to the Macintosh), it became a public matter that Apple was switching to the GUI (Graphics User Interface), which used windows, icons and menus as visual metaphors for controlling the computer, as opposed to the text interface used by MS-DOS and other OS’s, which depended on specifically-typed and hard-to-learn text commands in order to operate. The GUI made it possible for anyone and their grandmother to use a PC. When Microsoft saw this happening, they knew they had to come out with a GUI OS as well, or wither and die. But there was not enough time to create a GUI OS from the ground up, so Microsoft slapped together a sloppy and barely workable GUI on top of MS-DOS. The sloppiness showed, and for many years, the OS was far inferior to the Macintosh, which premiered with a GUI in 1984. Eventually, however, after several revisions, MS Windows became more acceptable, but not until the 90’s. It took at least a decade for Microsoft to finally produce a ground-up GUI OS to take over the heavy lifting for MS-DOS, and that was Windows NT. While MS-DOS remained the center of Windows Home versions until 2001 (Windows 95, 98, and Me), NT took over completely when Windows XP was released. Along the way, they stole the best features of the Mac’s OS and made them their own.

So one might wonder, how come in the first several years, Microsoft captured so much of the market with an inferior OS? The main reason for that was IBM’s strategy for their platform, the IBM PC. While Apple computers are proprietary and can only be produced by Apple (save for an abortive experiment with clones some years back), the IBM PC was, from the start, open for any company to produce. So companies that wanted in on the market found the IBM PC (now just called “PC”) platform the way to go, and the intense competition and widespread production kept prices down, a necessity for many businesses. That, combined with Apple’s loss of direction while Steve Jobs was away, allowed the PC to dominate the market. And Microsoft dominated the PC.

That dominance is what has brought criticism of Microsoft, because of the way they use it. Microsoft does not only make the operating system, it also produces Microsoft Office (Which includes software for word processing, spreadsheet, presentation, scheduling and database), a browser, email, a music and video (“multimedia”) viewer, and others (such as Publisher for DTP and FrontPage for web page design). On the PC platform, Microsoft has many competitors for application software of that type–and those competitors have long cried foul over Microsoft’s oppressive tactics.

The Windows OS has been a cornerstone of those tactics. Since Microsoft controls the OS, it can use that control to give their application software an edge over competitors. Imagine if one business owned a shopping center, and rented out most of the space to other businesses, while keeping its own stores as part of the mall. Those mall-owned stores would be competing with other stores in the shopping center trying to sell the same goods. The business which owns the shopping center would have an unfair advantage over all the other shops. It could give the best locations to its own shops and make the other businesses operate in hard-to-find locations with little traffic. It could control the messages displayed on the main marquee of the mall, using it to advertise only its own stores. It could put bus stops and walkways so they led consumers to their own shops and away from other shops. It could keep information about the complex’s infrastructure (phones, electricity, water, etc.) secret and so control other stores’ use of those facilities.

You might ask, why don’t those stores just move to another mall? The answer is, because this is the mall that 95% of all people visit.

These are the kinds of things Microsoft does. Microsoft’s own software is featured in their OS to the exclusion of other companies’ software. Why do most people use the Internet Explorer browser? Because that’s what is on their desktop when they get the computer. An amazing number of people do not even know that other browsers exist. The OS and browser software together tend to steer people towards Microsoft’s products and services and away from those of others. And Microsoft keeps the source code of the OS a heavily-guarded secret, which allows their software to work smoothly with Windows, while other software by third-party companies struggles to keep up–not because of inferior design, but because Microsoft jealously guards the ability to interoperate with the OS so that they can stay on top.

Okay, another bit of history. In 1993, Marc Andreeson invented a new kind of software: the browser. The program that you use to view web pages, the one that practically started the entire Internet revolution and boom of the 1990’s. The first one he created at the University of Chicago, and it was called Mosaic. But then Andreeson started his own company and presented the Netscape browser. For many years, Netscape was the browser, the most popular, the gold standard.

Microsoft wanted to take that away from them. They created Explorer, and used their dominance of the Desktop to put Explorer before everyone’s cursor, meaning that anyone who wanted Netscape would have to (a) learn about it, and (b) go to the web site and download it. This was a huge disadvantage.

But in 1998, Microsoft went even further: they integrated the Explorer browser directly into the Windows Operating System. Open a folder in any Windows OS since Windows 98 (98, Me, 2000, XP). With standard settings, you should see an address bar, just like in a browser, and have the option to list Internet links in the toolbar of the window. Select the Tools menu and choose “Options,” and you’ll have the ability to enable browser-style or classic windows, even make files and folders appear like Internet hyperlinks, blue and underlined, which open with a single click. These and other browser features became an integrated part of the Operating System–meaning that you couldn’t remove them. And without removing them, Microsoft’s Explorer browser was even more ensured to remain the browser everyone used. Netscape, once the king of browsers, and with better features and operability than Explorer, lost the war. People stopped using it, not because it was worse, but because Microsoft abused it’s ownership of the Desktop and so pushed it into obscurity.

Today, Microsoft does the same thing with Windows Media Player, the app most people now use to play music and video files. Just like Explorer, it is the default player because Microsoft owns the Desktop and puts it, and nothing else, there.

So in 1998, the Justice department under the Clinton administration, with the cooperation of many state governments, initiated legal action against Microsoft. In 2000, a judge came very close to ordering Microsoft to be split in two–one company for the Windows OS, another for the application software, and Gates could only retain one. That possibility was temporarily set aside when a appeals court decided that the judge who handed down the initial verdict had tainted the proceedings by speaking about it to the media. The government still had the potential to ask for the breakup again with another judge, and had a good chance of winning. But then something happened which saved Microsoft’s bacon.

Bush got elected.

Microsoft contributed much to both parties, spreading the money around, but that didn’t work with Clinton. It did, however, with Bush, who got more donations from Microsoft than anyone else, and when bought, stays bought. Ashcroft was similarly a large Microsoft benefactor. Just five days before 9/11, John Ashcroft suddenly declared that the government would not ask for Microsoft to be split in two, a threat seen as the most potent weapon with which to make Microsoft behave. Ashcroft also ruled out forcing Microsoft to reveal its most important source code and letting other software vendors work on an even playing field. He also decided to allow Microsoft to continue bundling its own software with Windows and excluding other companies’ software. He nixed the plan to have a technical committee be a watchdog to see that Microsoft was following the settlement, and instead allowed Microsoft to police itself. It only demanded weak sanctions which were made almost toothless by vague language which Microsoft was able to weasel around. Even these weak sanctions would only last for five years.

Why did Ashcroft decide to unilaterally surrender all of his leverage and essentially surrender the case completely? According to Ashcroft’s DOJ, it was in order to “streamline the case with the goal of securing an effective remedy as quickly as possible.”

Well, Bush and Ashcroft may have been bought, but the rest of the world hasn’t. While Asian countries mull over what to do, the European Union has taken action: this week, EU trade regulators judged that Microsoft had violated antitrust laws in Europe, and declared that Microsoft would be fined $612 million, would be forced to sell a version without its own software loaded up front, and would be required to reveal its source code to competitors; and that a non-Microsoft committee would oversee the enforcement of those penalties. In other words, the EU did what Bush and Ashcroft sabotaged, short of being able to split Microsoft into two companies.

Well, Microsoft spent their money well, with ten congressmen, including prominent Republicans (Senate Majority leader Bill Frist and head of the Foreign Relations Committee Senator Richard Lugar) immediately pronouncing that the EU is headed towards a “trade war” if it carries out these sanctions.

A trade war? Because the EU didn’t get bought? Because they fined a company for antitrust and were right? How would this stifle U.S. trade at all? If anything, U.S. companies other than Microsoft have everything to gain from this, and it could open up a more competitive computer software market with great benefits to the industry and to consumers as well. But instead, the U.S. is going to engage in a damaging and expensive trade war in order to allow Bill Gates to keep his monopoly intact?

And don’t expect anything to happen soon. Microsoft immediately filed an appeal, and it will probably be five years before anything is decided–and it could drag on longer than that.