A Modest Proposal on MSHoo

Apparently the off and on again wooing of Yahoo by Microsoft is on again. And of course Google is saying in China, of all places to raise the question of monopoly – but Eric Schmidt could have made the speech in Washington DC the only place where monopolies are currently coddled even more so. His DoubleClick purchase got the same type objections from Microsoft with barely a peep from the DOJ – Antitrust.

So while the two Search Behemoths attempt to monsoon rain on each others parade, let me suggest a small but significant Antitrust action be taken in the case that the Microsoft- Yahoo purchase goes through. Let Yahoos Zimbra out of the merger and instead let it free on the open market. Why?

Well Microsoft clearly has a monopoly of Office Software. And is planning a Live Office Service. So far neither the DOJ nor the European Union have acted on this $8B a year monopoly that returns 85% before tax profits. Nothing wrong with the latter figure other than it confirms the definition of a monopoly.

But there is a problem in the Office arena where Silicon Valley venture capitalists will not touch any startup with office product ambitions. And Microsoft already has a complete online Live Office version so why duplicate ? Especially why duplicate when all the developed Zimbra Suite is on a Open Software License, anathema in Redmond just ask Steve and Craig. So if Microsoft gets to devour Yahoo – it should be forced to divest itself of Zimbra.

In sum, the spoils of monopoly profits should not be that Redmond gets to squash a competitor to the monopoly Office product line – especially in the nascent online Office marketplace. Back in the DOJs 1998-2000 Antitrust case against Microsoft, there would have been a simple solution – force Microsoft to divest itself and be disallowed from entering the Browser and Web Server markets (where Redmond achieved all its ill gotten gains). No big split-up just an elegant adjustment that would have:
1) Punished Microsoft exactly for the crime it committed;
2) Probably spared the Internet of 3-5 years of IE and IIS security breeches and virus agonies;
3) Definitely spared Web developers from 7 years of paying the Redmond IE and IIS tax for non-compliance with promised standards, proprietary extensions, and patches galore;
4)Probably prevented Microsoft from attacking the Web unsuccessfully for a third time by not updating IE and much of its Web software for 5-7 years effectively killing any movement on Web Standards (just go to W3C and ECMA and look at the hiatus on working papers for key HTML, DOM, CSS, XForms, JavaScript, E4X and many other Web standards);
5)Definitely would have unleashed the AJAX phenomena 2-3 years sooner and thus might have alleviated some of the severity in the Dot.Com bust.

Now lets be clear – we are not calling for Microsoft to be hindered in entering the online Office marketplace; just from being able to suppress a viable competitor. And dont be swayed by the upcoming Redmond protest – “we plan to utilize Zimbra in our online Office software” in about a million years. Here is another case where, small, simple, and elegant government action on a innovation sapping monopoly, would allow the Ayn Rand/Joseph Schumpeter competitive forces to work in their Darwinian ways to the vast appreciation of the Wall Street Journal and IBD.