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York U. Analysts Assess Microsoft Decision and Industry Repercussions in Canada and Globally
Critics of the ruling say it is legally flawed, and has come too late in a global industry that has already sped ahead of the market conditions in which the US government's anti-trust suit against Microsoft was launched. While share prices of Microsoft competitors, such as Red Hat, and Canada's Corel, have shot up on the news, smaller companies that rely on the huge financial resources of Microsoft to support them in development may not be so optimistic about a potential breakup of the house that Bill Gates built.
York University analysts arguing on all sides of this complex equation present the pros and cons -- for the industry and the consumer -- of putting the reins on Gates.
Paul Hoffert is Adjunct Professor in the Faculty of Fine Arts and Director of the CulTech (Culture and Technology) Research Centre at York, which models the future of connected communities and builds partnerships among academic institutions, governments and the private sector to test them. Hoffert says the US Court finding against Microsoft will only accelerate what would have happened in the market place anyway -- the recognition that other companies have good or better products to offer. "I believe there will be a much greater flourishing of innovation in the Canadian computer industry now," he said. "Microsoft has been a stifler of innovation, and the number of small companies now relying on Microsoft support will be more than offset by the new start-ups that would take place with Canadian venture capital." Hoffert is author of the book, The Bagel Effect (McGraw-Hill Ryerson, 1998), which argues that power and control is moving away from centralized organizations to customers, citizens and users at the edge of these organizations -- a function of the phenomena of decentralization, downsizing, deregulation, digitization and convergence. Hoffert can be reached at (416) 560-6732.
Michael Jenkin, Chair of the Computer Science Department at York, says the ruling against Microsoft will add more confusion to the direction in which its Wintel operating systems and software will go. "While Microsoft is busy fighting legal battles, they will de-focus from their primary mission of producing software and operating systems for desktop machines and other devices, giving alternatives such as Linux more room to manoeuvre," said Jenkin. He asserts that while a breakup will generate opportunities for other, similar product lines, it won't lessen Microsoft's predominance as a manufacturer of operating systems and office suite software. Jenkin can be reached at (416) 736-2100, ext. 33977.
Sam Lanfranco is Professor of Economics at York's Atkinson College, specializing in information and communications technology and what it means for social processes, organizational structures, and organizational change. He says the Microsoft ruling looks backwards at what the industry used to be. "The global economy is larger than nation states, which make these rulings on the basis of historical situations." Lanfranco says the US Court ruling will open a window for a little more competition in the short term, but the question is how long will that last before the changing optimal scale of the technology forces another reassembling in the industry. "We're in a period of major change and there is a lot of backward-looking regulation, while it is not obvious what we're heading towards," said Lanfranco, asserting that industry standards will have to be publicly owned. He can be reached at (416) 736-2100, ext. 20131, or (416) 816-2852, or sam@lanfranco.net.
Phillip Phan, a Professor of Policy at York's Schulich School of Business, says Microsoft developed large parts of the Windows system in Canada so the biggest issue for the industry here is how the US ruling will impact on Microsoft's Canadian alliances. "If Microsoft is weakened, those companies that don't have the financial resources to develop their own technical capabilities may suffer," said Phan. He says Microsoft is a major employer in the Greater Toronto Area and consumes a lot of the technical talent, so employment may be another concern. Phan can be reached after November 16 at (416) 736-2100, ext. 77895.
Larry Schwartz is Adjunct Professor of Finance at York's Schulich School of Business and a specialist in competition law. He notes that Canada's competition law, the Combines Investigation Act, was thoroughly amended in 1986 to become the Competition Act after many failed attempts at reform. Schwartz, who is a member of the Canadian Competition Tribunal, can explain the differences between US anti-trust laws and Canadian legislation on competition. He notes that in Canada, the Commissioner of Competition must agree to take up a case because no private right of anti-trust action in Canadian law exists. He can be reached at (416) 952-9996.
Don Thompson, Nabisco Brands Professor of Marketing at York's Schulich School of Business, specializes in strategic market planning, marketing strategy and marketing and economic regulation. He says the US Court's preliminary ruling is itself vulnerable because it defines the market for operating systems too narrowly and concedes that Microsoft's bundling of its Internet Explorer browser in Windows improved the quality of web browsing software. Nevertheless, he predicts additional lawsuits will be launched by private companies that think they have been victimized by Microsoft, including the big firms named in the US government's action. Thompson says the battle now in the computer industry will be between open source systems like Linux versus Microsoft's proprietary systems, where a principal Linux user is the Ottawa-based Corel, whose share price jumped 16 per cent on Monday. "The next major battle will be over the creation of a multimedia digital environment in the home," said Thompson, adding that the ruling against Microsoft has now opened the door for hundreds of third-party suppliers like Nortel to supply components for this system, using other software along with Microsoft's. "This is all good news for smaller Canadian software and hardware companies." Thompson can be reached at (416) 736-2100, ext. 77961.
For further information, please contact:
Susan Bigelow |
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