Joel Klein, Entrepreneur: We Do Need a Remedy to Curb Microsoft. Killing the Company Isn't the Right One

By Levy, Steven | Newsweek, May 8, 2000 | Go to article overview

Joel Klein, Entrepreneur: We Do Need a Remedy to Curb Microsoft. Killing the Company Isn't the Right One


Levy, Steven, Newsweek


Who knew that Joel Klein was a closet venture capitalist? Most of us thought that during the past few years Janet Reno's antitrust czar and his prosecution team were turned on by lawyerlike stuff like consent decrees, special masters and making Bill Gates's lawyers look like crash dummies in court. But last Friday, unveiling his proposed remedy for Microsoft's illegal conduct (as ruled by Judge Thomas Penfield Jackson), Klein showed a previously untapped passion for writing business plans.

Instead of starting with a couple of Stanford geeks with a Web site, Joel Klein seeds his incubator with a famous $400 billion enterprise and splits it in two, giving one the world's dominant operating system, the other the world's most successful applications. What used to be Microsoft will be... Microsoft and Mini-Microsoft. Or, as Klein's team puts it: "Ops Co" and "Apps Co." (Somebody had better nail down the domain names.) Will it be painful to split apart the world's most successful software company? Piece of cake, says Spreadsheet Joel, who promises that the operation can be performed at "a modest cost" and minimal disruption to consumers and even employees. Don't think of it as a breakup--it's a "reorganization," says Klein.

Klein's comparison is to the AT&T case, the last time the government saw fit to perform the saw-the-monopolist-in-half trick. That was a case where one company owned the wire to everyone's house and was delighted to sit around and collect its tariffs. Though you may not like your local phone bill now (you may not be able to read your phone bill), that breakup clearly unleashed some innovation.

But Ma Bill isn't Ma Bell. Microsoft may be a monopoly, but no one would call it complacent. Its attitude toward customers is not imperious but irrepressible. Yes, Klein's minions proved that Microsoft played unfairly, and it should never be allowed to abuse its dominance again. But plenty of people in Silicon Valley think that Windows will soon find itself less relevant as the action shifts to nondesktop Internet devices like palmtops and game consoles--areas where Microsoft hasn't dominated.

Klein's business plans don't account for that paradigm shift. And when it comes to assessing the difficulty of his proposed reorg, he's misinformed about the present. His prosecutors claim that Microsoft's apps and OS are created in isolation, and that "separating those Businesses will not impede the development of either company's products... and in fact will increase efficiency." Hasn't he learned anything by reading all that 'Softie e-mail? Microsoft is a single, formidably organized army, designed to fulfill a unified mission.

Its current companywide crusade is called Next Generation Windows Services, a remake of its entire product line to fit upcoming Internet technology. …

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