In the era of globalization, the management mantra seems to be "bigger is better." From automakers to securities traders, every business aspires to the size and weight that would allow it to influence -- if not dictate -- developments in its particular industry. In the fast-moving world of high-technology, there is another dimension to the race for pre-eminence: "first movers." By quickly dominating a field, a technology company can establish the standard that all other companies, including its competitors, must use. The most famous such standard is the Wintel combination of Intel computer chips and the Microsoft operating system. Yet, as both of those companies have learned, success can sew the seeds of future catastrophe: The preliminary ruling issued earlier this month in the antitrust suit filed by the U.S. government against Microsoft is a cautionary tale for any company that dreams of dominating its industry.
In a blistering 207-page ruling, U.S. District Court Judge Thomas Penfield Jackson found that Microsoft "demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products." He argued the company "stifled innovation," deterred investment in other products and hurt consumers.
Damaging though the rulings are, they are not a final judgment; that might be issued by the end of the year, however. In the interim, the judge appointed Mr. Richard Posner, chief judge of the 7th U.S. Circuit Court of Appeals, to oversee "voluntary" talks between the parties. In the wake of Judge Jackson's findings, Microsoft chairman and founder Mr. Bill Gates now sounds more conciliatory about reaching a settlement. It is not hard to understand why.