| BUSINESSWEEK ONLINE : NOVEMBER 22, 1999 ISSUE | ||||||||
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| COVER STORY -- THE MICROSOFT RULING
Commentary: How Intel Played It Right Nobody has ever called Intel Corp. (INTC) a pushover, especially in legal matters. But the combative chip giant was more helpful than hostile when the Federal Trade Commission launched an inquiry into its business practices in 1998. Intel quietly complied with the FTC's subpoenas and strove to keep the investigation out of the limelight. In the end, the case was settled before it went to court, just nine months after it was filed, on terms judged favorable to Intel by most analysts. The key victory: Intel avoided being tagged a monopoly. Too bad Microsoft Corp. (MSFT) didn't follow the same strategy when it tangled with the feds. From the start, Microsoft has alternated between high-handedness and naivete in its dealings with the government. When the feds charged in late 1997 that Microsoft had violated a 1994 consent decree regulating its software-licensing practices, the company countered by mocking Attorney General Janet Reno publicly. When antitrust investigators launched their probe, Microsoft chose to drag its feet instead of cooperating. CHILDISH TRICKS. Worst of all, Microsoft tried to finesse its way through a landmark federal court proceeding, marshalling doctored demos, equivocal testimony, and a squirming deposition by Chairman William H. Gates III. The results are now apparent: Judge Thomas P. Jackson did not buy Microsoft's performance. More than anything, the outcomes of the cases against the twin titans of technology underscore the difference between aggressiveness and arrogance. Intel is incomparably ferocious, but Chairman Andrew S. Grove and other managers have known setbacks and tough times--among them the company's wrenching 1985 decision to exit the memory-chip business and the snowballing public humiliation of the Pentium bug in 1994. Those challenges taught Intel if not humility, then at least some savviness in navigating crises. And they've reinforced that compromise can be smarter than holding out for total victory. Microsoft, by contrast, suffers from a youthful cockiness that it should have outgrown. Its reaction to the antitrust case ''was that of a child in a supermarket who flings himself on the floor, kicking and screaming, when his mother says he can't have a piece of candy,'' says Paul Saffo, director of the Institute for the Future. Microsoft seemed to view the case as an affront, a roadblock to be overcome with the same potent mix of bullying and spin control it uses so effectively in the market. It didn't have to be this way. After its brush with trustbusters in the early 1990s, Microsoft could have adopted an antitrust compliance program similar to the one Intel has employed for a decade. More importantly, it could have treated the consent decree as a wakeup call to create a more mature and cooperative corporate culture. Instead, like kids who think they've snookered the grownups, Microsoft pushed the envelope even further in its dealings with customers and rivals. MANNERS COUNT. Intel, of course, is no wallflower. But by playing it cool and agreeing to concessions, it escaped its brush with the FTC unharmed. The chipmaker ''adopted a very professional and cordial tone'' throughout the legal battle, says Richard G. Parker, director of the FTC's Bureau of Competition. Contrast that to Microsoft. Having now been labeled a monopoly, the software maker faces an uncertain future. It is more subject to follow-on civil suits from aggrieved rivals. Any attempted settlement with the government now starts from a seriously weakened legal position. And if Microsoft fights on, it faces the threat of structural remedies, possibly even a court-ordered breakup. Gates and team might have avoided much of that if they had shown less hubris. Like a child prodigy, Microsoft is all brilliance and energy, not yet possessed of wisdom. The next few years may help it grow up. By Andy Reinhardt _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS Does a Breakup Make Sense? COVER IMAGE: Microsoft: Does a Breakup Make Sense? TABLE: No Easy Fixes Who Can Sue Commentary: The Burden of Being a Misunderstood Monopolist So What's in the Cards for Microsoft? TABLE: Reshuffling the Deck Commentary: How Intel Played It Right Commentary: The Lessons of the AT&T Breakup INTERACT E-Mail to Business Week Online | |||
