The reversal of the Microsoft breakup ruling surprised next to nobody. Wall Street shrugged, with the stock inching up a few percentage points. The die was cast when Judge Jackson’s critiques of Microsoft after his ruling compromised the appearance of objectivity. Of course there was the DC Appeals Court’s known hostility to antitrust cases, not to mention questions of whether the Bush administration would seriously push the case if the rulings went the other way.
But no court ruling can alter the facts of life: the technology market has consolidated because the market has voted for the Jack Welch philosophy: don’t take a company seriously if it isn’t first or second in its market. Remember, buying hardware or software is like buying equity–the last thing you want is for your vendor to go belly up, and your product orphaned.
And even if Microsoft bullied Netscape, most of the victim’s wounds were self-inflicted. Yes, Microsoft undermined Netscape Navigator, but who could have made a real market in browsers alone? Maybe build a real enterprise business, or bundle in consumer goodies like a music player and legal Napster-like subscription service, and then you might have had something that people would actually pay for. Instead, Netscape let companies like BEA and Real Networks seize the initiative.
Microsoft will likely get its hands slapped during the penalty phase. So what can we learn here? Big remains OK with the courts and the market as well. But big companies are not always safer investments. (Remember DEC?) CA, whose product lines are far less coherent than Microsoft’s, has become the poster child for bloat. Yes, it will probably win its upcoming proxy skirmish, but don’t be surprised if CA has to start shedding weight. Soon.