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Excerpt from Breaking Windows

Monday, August 13, 2001 by Dave Winer.

Introduction by Dave Winer Permalink to Introduction by Dave Winer

In April I received an invitation from Wall Street Journal reporter David Bank to review his upcoming book about Microsoft, Breaking Windows, and of course I said yes. I consume those kinds of books as part of a steady diet of computer-related literature.

Books in this genre can be exhausting, often portraying the leaders of Microsoft as inhuman heroes and geniuses; but Bank's book is different, more real, because he tapped into a huge collection of emails from Microsoft executives that were made public during the antitrust trial. That gave Breaking Windows a grounding that no previous Microsoft treatise had. For the first time the humanity and confusion comes out, in a sympathetic way, in the exact words of Bill Gates, Steve Ballmer, Jim Allchin, Brad Silverberg, Brad Chase, David Cole, Ben Slivka, Adam Bosworth and many others. You can see how events outside Microsoft were shaped by people at the top levels of the company, in their own words.

Microsoft has long appeared to be a well-oiled machine, moving in lock-step towards goals set by Bill Gates. In Breaking Windows, however, a different picture emerges. The agony inside and around Microsoft is the theme of Bank's fantastic book. I believe it's the most illuminating and important book you can read in 2001 if you're part of the computer, software or Internet industry.

I asked for permission to run an excerpt, and the publisher, The Free Press, graciously agreed. This section, pages 113-122, is crucial to the story. In this excerpt Bank tells the story of Microsoft's decision to comply with a judge's order to open up Windows to other browsers by breaking Windows, an act of self-defacement that illustrates how far Microsoft will go before bending to authority. I was at Microsoft the day this happened, and remember discussing it with people there. A line was crossed for many of us in this event, and as you will see, the line went through the top levels of Microsoft.

I've included pointers to further reading and a discussion group for the book at the end of the piece. Now here's the excerpt from Breaking Windows by David Bank.

Excerpt from Breaking Windows, by David Bank Permalink to Excerpt from Breaking Windows, by David Bank

Gates's triumphant visit to China was interrupted by a call from Microsoft's in-house antitrust lawyer, David Heiner. The news: U.S. District Court Judge Thomas Penfield Jackson had sided with the government and ordered Microsoft to stop tying its Internet Explorer browser to Windows. At a news conference in China, Gates declined to comment on the case. He hurried home.

To Microsoft executives, the implications of the order were as foggy as the Seattle weather that Thursday afternoon in December 1997. The good news was that Jackson denied the government's request for a contempt citation. The consent decree and Microsoft's behavior, he said, were both too ambiguous to support such a ruling.

However, on his own, sua sponte, Jackson moved to enforce the 1995 consent decree Microsoft had negotiated with the Justice Department and European antitrust authorities. At issue was the section of the decree barring Microsoft from forcing PC makers to take an "other product"-in this case, the browser-as a condition of licensing Windows. For monopolies, this kind of "tying" is a no-no. It is considered inherently anticompetitive. If customers genuinely wanted the other product, there would be no need to force them; if they didn't want it, they shouldn't be forced to take it in order to get the product they need.

Any ambiguity came from a proviso that had been negotiated into the 1995 consent decree almost as an afterthought. Now the proviso became the heart of the matter. The consent decree's anti-tying clause, the proviso clarified, "shall not be construed to prohibit Microsoft from developing integrated products." The loophole appeared to give Microsoft an out.

It was Gates himself who had insisted on the loophole in late-night negotiations in 1994 with Joel Klein's predecessor as Clinton's antitrust chief, Anne Bingaman. In the talks, Microsoft's attorneys at first suggested a more limited proviso to the anti-tying clause: Microsoft would not be prohibited from developing integrated products "which offer technological advantages." But that restriction was unacceptable to Gates, who refused to give bureaucrats the authority to decide whether changes to Windows delivered such advantages; he directed his lawyers to remove the last four words. Gates was emphatic that Microsoft would not accept any limitations on its rights to design its products as it saw fit. Microsoft signed the consent decree, its lawyers said, only after ensuring its "unfettered right to incorporate new features into its operating systems," according to a declaration by Microsoft's outside counsel, Richard Urowsky of Sullivan & Cromwell.

At the last minute, negotiators agreed to drop another phrase from the proviso. The original wording of the phrase was ". . . shall not be construed to prohibit Microsoft from developing integrated products nor necessarily permit it to do so." The negotiators later explained their thinking: They were simply deferring any definition of "integrated" to a later day, not rewriting antitrust law. Yet, as it stood, Gates apparently believed he had outfoxed the government.

Throughout the summer and fall of 1997, Microsoft's attorneys insisted in a series of meetings with Justice Department attorneys that the "integrated products" proviso gave Microsoft a free pass to add Internet Explorer to Windows. The government was welcome to try its luck with a full-blown Sherman Act antitrust case, they said. But with the language of the proviso, Klein might as well give up any thought of a quick victory with a narrow case under the consent decree, Microsoft's lawyers said. "Don't waste your time on the consent decree. Look at the language," Bill Neukom, Microsoft's dapper general counsel, told Klein's lawyers.

To Microsoft, the proviso blessed the company's right to add any features it chose to its operating system, just as the company had been doing for sixteen years. Microsoft defined "integrated" the way Webster's Third New International Dictionary defined it-"combined," "united," or "incorporated into." Under the company's definition, a product is integrated simply because Microsoft says it is. In discussions with the government, Microsoft's attorneys famously argued, were it not for a lack of marketplace demand, the company was free to bundle a ham sandwich into Windows.

Now Microsoft's confidence was shaken by a federal court judge. "Microsoft's 'unfettered liberty' to impose its idea of what has been 'integrated' into its operating systems stops at least at the point at which it would violate established antitrust law," Jackson wrote. To enforce the point, he issued a preliminary injunction ordering Microsoft to drop its requirement that PC makers preinstall Microsoft's Internet browser as a condition of licensing Windows. Even more alarming, the judge's order covered successors to Windows 95. It was the first time Windows 98 had been formally dragged into the company's antitrust troubles. Microsoft had even grander plans for using the market power of Windows 98 to boost Internet Explorer.

Nobody had thought it would go that far. "His last paragraph there was very broad and sweeping, which stunned us," Allchin recalled. Maritz said, "There were a lot of things in there that I personally found confusing."

The company's high command faced a long weekend of work. Neukom was nominally in charge of the company's legal strategy. But it was David Heiner who was the workhorse, serving as project manager for dealing with the Justice Department and as referee for Microsoft's loud and fast-talking executives. Heiner took over the boardroom across the hall from Gates's office in Building 8 and turned it into the war room for gathering input and plotting strategy.

For those who gathered in the boardroom, the legal discussion was a test of their ability to compartmentalize, a highly prized and necessary skill at Microsoft. The technology tug-of-war between Allchin and Silverberg and the legal imbroglio with the government were running in parallel. The two fronts involved the same set of issues: the relationship of the new phase of technology evolution, centered on the Internet, with the old phase, centered around Windows. Throughout the fall, many of the same people-Maritz, Allchin, Chase, Cole, and of course Gates-were deeply involved in both sets of discussions. Silverberg, who remained officially on leave, was absent from the legal discussions.

The group pored over the ruling. In Gates's absence, Steve Ballmer peppered Heiner with dozens of questions. There were procedural problems with Jackson's orders, the lawyers explained. When Jackson threw out the contempt claim, that should have been the end of it. But Jackson had moved on his own to issue a preliminary injunction. And he had appointed a "special master," a law professor from Harvard named Lawrence Lessig, to help sort out the issues in what might well turn into a mini-trial of its own, possibly leading to permanent remedies. Lessig was beginning to make a name for himself applying constitutional principles to cyberspace policy disputes. He looked like bad news to Microsoft.

But all that could be taken up later. The preliminary injunction demanded an immediate response. The group quickly dispatched with the implications for Windows 98 by deciding to ignore them. There was plenty of time to challenge them in the six months or so before the expected release of the new operating system. "We had a discussion that said we specifically weren't going to think about this," Allchin later told government lawyers. "We're not thinking about it. March on. In our business we could disrupt a lot of people for nothing in a situation where time is slipping away on us."

It was not as easy to dismiss the implications for Windows 95. The group considered a number of ways to easily deactivate Internet Explorer. Microsoft's own Web sites boasted that "IE uninstalls easily." Perhaps Microsoft could offer PC makers a version of Windows 95 with the Internet Explorer icon removed from the desktop and other program menus. Or it could let PC makers use Windows' own "uninstall" program to remove the browser in the same way a customer might. That, after all, was what the PC makers were seeking from the beginning.

Ballmer's first instinct was to strike a pose of humility and try to avoid direct confrontation with the government. Chase, too, favored taking the high road in the hopes of gradually winning over the company's adversaries with charm and what he was sure were the merits of Microsoft's arguments. Justice Department officials were saying they expected to meet with Microsoft's lawyers within a few days to agree on an approach to satisfy the order. Something could be worked out.

It was spin-control time. The company's first response was striking in its moderation. A Microsoft flak, Adam Sohn, a damage-control veteran from the 1992 Clinton presidential campaign, spread good news to reporters. "We think it's a pretty balanced decision and we're grateful," he said.

Microsoft's press release also accentuated the positive. The company was "gratified" Jackson did not find the company in contempt. It was "looking forward" to presenting more evidence. It was "confident" it would prevail. The press release dismissed as a minor issue the order that Microsoft offer a browser-free Windows. Microsoft could continue to license Windows 95, the release stressed, as long as each PC maker "has the option of installing the portion of Windows 95 that does not include Internet Explorer 3.0 or 4.0 files." Over the weekend, one Microsoft spokesman told the Wall Street Journal the company expected to find ways to let PC makers delete Internet Explorer 3.0 and 4.0 files and still allow Windows to function.

When Gates returned from China, he turned the group around and changed the conciliatory tone. To him, a milquetoast response put Microsoft on the slippery slope to bankruptcy. The government's suit was an attack on the company's ability to add features in Windows. Integration was not only a fundamental principle, it was the basic business strategy Microsoft had pursued since it licensed its first operating system sixteen years earlier. If PC makers could pick and choose which parts of Windows to offer and what features to promote on the desktop screen, they could cut deals with Microsoft's competitors to gradually displace Windows.

That was why he had pushed so hard in the negotiations over the 1995 consent decree to secure the exception for integrated products in the first place. Now it was time to take advantage of his foresight.

At stake were all the company's plans for Windows Everywhere. It wasn't only about the browser war, where the momentum had shifted in Microsoft's favor such that the company could probably afford to let PC makers delete the Internet Explorer icon, or even the browser itself, without significant harm. But what about the Windows media player, which competed with the streaming video player from Real Networks? Or voice recognition, where IBM was strong? Or some other technology in the future? "Their position is that every major thing we've done, every major thing we're planning to do, should be blocked," Gates said later.

Gates considered the alternatives. At the end of his sixteen-page memorandum, Jackson's one-paragraph order was vague on exactly what Microsoft was required to do. All it said was that Microsoft must stop its practice of licensing Windows on the condition PC makers also license and install "any Microsoft Internet browser software."

Jackson, in his longer memorandum, though not in the order itself, referred to the "software code that Microsoft itself now separately distributes at retail as Internet Explorer 3.0." Government prosecutors also referred to the retail product in their request for action. The government's imprecision in defining exactly what it meant by "browser" was to be a recurring issue in the case. David Cole had submitted an affidavit attesting to the fact that IE 3 and Windows 95 shared a number of files needed by the operating system even to boot up, or start, properly. Removing all of the IE 3 files would "break" Windows, he had said.

Gates wanted to know what would happen if Microsoft adopted the most extreme, hyperliteral reading of the order? What if the company were to comply with Jackson's order by offering PC makers a version of Windows stripped of every line of code that also appeared in Internet Explorer? PC makers would have the option of installing a broken version of Windows 95, free of Internet Explorer. Microsoft could comply with the letter of the order and demonstrate the absurdity of the government's position at the same time.

Gates, a lawyer's son, was ferocious in legal debates. Microsoft's attorneys needed all their self-confidence and legal experience in order to keep up with his ability to instantly understand and apply the law. Microsoft's internal discussions are typically fast, loud, and "high-bandwidth"-a phrase borrowed from telecommunications conveying high praise for the volume of information that could be exchanged rapidly.

The pedantic, formal style of Richard Urowsky, Microsoft's outside counsel, couldn't be more different, but Gates had immense respect for his legal abilities. In the boardroom, Urowsky's ponderous voice came over the speakerphone from Washington, D.C.

"Bill." There was a long pause. "Bill." Another pause. "This is Richard." Urowsky's trademark interruption was one of the few ways to slow one of Gates's hundred-mile-per-hour rants. The ploy worked marvelously, shutting Gates up and making him smile at the same time.

Microsoft's lawyers agreed that under the strictest possible interpretation of Jackson's ruling, Microsoft could argue that it was required to offer a version of Windows stripped of any of the code also used in the retail version of IE 3.0. Microsoft could argue that the simplest method of "removing" IE was barred under the injunction-simply letting PC makers remove the IE icon, or use the "uninstall" feature, because both of those methods left much of the underlying code in place. If the goal of Microsoft's defense was to protect the principle that Microsoft can integrate new functionality into Windows, why offer alternatives that might not comply with the judge's order but could put fetters on Microsoft's unfettered ability to integrate?

The group also was aware that giving PC makers a choice between the status quo and a commercially worthless product might not have been what Judge Jackson quite had in mind. It was never a good idea to anger a federal judge.

The proposal sat on the boardroom table, like a bomb ready to go off.

"We're going to look terrible. We're going to look terrible. We're going to look terrible," warned some people in the room, Ballmer told me later. "I'm in the group of people who understood, we're not going to look good." Ballmer was still recovering from the fallout that followed his "To heck with Janet Reno!" outburst at a Microsoft sales event a month earlier. Microsoft could take a hard line and make its point, but Ballmer wanted to know, What is the outcome? What is the collateral damage? Ballmer acknowledged, "We agonized over that, looking bad."

Indeed, the Broken Windows approach was far from the most commonsense interpretation of the order. The injunction was simply a cease-and-desist order, a holding action until the court could make a final determination about whether Internet Explorer was a sepa- rate product and thus covered by the decree. The most thoughtful analysis of the whole mess came from Lessig, the brainy Harvard law professor. Before Lessig's appointment as Jackson's special master was rescinded by the appeals court on technical grounds, he offered his preliminary opinion in an eleven-page letter to lawyers on both sides.

Lessig found that the terms of the original decree were the real guide to what was and was not allowed; Jackson's injunction was simply meant to enforce the decree. And the plain meaning of the consent decree was to give PC makers a "zone of sovereignty" from Microsoft, protection for their freedom to choose competing products. Thus, Microsoft could have met the zone of sovereignty test, Lessig wrote, by lifting the provisions that restricted the freedom of PC makers to remove or disable the code that enabled the browser's functions. "If Microsoft simply said, with respect to IE, 'You are free,' Microsoft would be in compliance."

In contrast, Microsoft's all-or-nothing stance did nothing to set PC makers free. Microsoft interpreted the injunction that PC makers couldn't be forced to take all of Internet Explorer as meaning they couldn't take any of it, even the parts required to make Windows work. The requirement that PC makers either take the full Internet Explorer/Windows 95 bundle or remove every last bit of code didn't leave PC makers "free to choose about the package of products they will offer to customers," the plain meaning of the consent decree, Lessig wrote.

Setting PC makers free was the last thing Microsoft wanted to do. The "IBM-compatible" PC industry grew up around Microsoft's central role in defining the operating system platform; Microsoft treated PC makers less as partners and more as mere distributors for Windows. Now the PC makers wanted to rebalance the relationships with Microsoft, promote their brands as unique, and take advantage of their relationships with customers to expand their razor-thin profit margins. Microsoft would become just one of several parts suppliers for their PCs.

From Microsoft's perspective, any new relationship that let PC makers go their own way would weaken Microsoft's hold on software developers, who wrote programs for Windows because it was installed so widely. "The minute we give up the contractual hooks, we fragment the platform and we lose the value of the unified platform," Raikes, then the number-two sales executive, told me later.

Maybe there was room for compromise. As the weekend wore on, Maritz and others jumped in, favoring moderation. Maybe hard core wasn't the right approach in this situation, they said. This is a federal judge, not a software competitor. Things could get worse, a lot worse. At a minimum, the company was looking at three months of disastrous PR. Can't we just get this over with? some executives pleaded.

"It was an incredibly awkward, no-win situation," remembers Chase.

Gates continued to argue for the high-risk, high-reward response. If Windows and IE were "integrated," they were home free. To him, there was no better way to prove Windows is an integrated product than to show that it broke when Internet Explorer was removed. "We have to maintain the absolute right to design software as we see fit," he argued. This was a great way to slam home that point.

Gates's proposal drew supporters, including Allchin. Ballmer insisted later that Gates's viewpoint was not "substantively different" than that of the rest of the group. Nobody argued that the Broken Windows approach wasn't risky. Everybody knew the company would certainly take a public relations hit.

Still, Gates said, "I want to go for this." The clincher in his argument: If Microsoft followed the letter of the ruling, it would help its case on appeal.

"We all agreed with Bill and braced ourselves for the fallout," said one participant.

On Monday morning, Microsoft offered the stripped-down version of Windows. To soften its stance, the company also agreed to make available a two-year-old version of Windows 95 that was released at retail before Internet Explorer was added to the product. PC makers would not be given any new flexibility to use the more commonplace methods to remove the browser functions or the icon.

The fallout was immediate. Dan Gillmor, in his column in the San Jose Mercury News, called it "compliance with a raised middle finger." The Justice Department claimed the response made an "absolute mockery" of the preliminary injunction and went back to court to again seek a contempt citation. Microsoft employees visiting home for the holidays were suddenly forced to defend the integrity of what had long been one of the country's most respected companies. "It's very painful when you go home and your son asks, 'Daddy, why is the government suing Microsoft?' " said Anthony Bay, one of the middle managers who had attended the Power Lab workshop.

Ballmer acknowledged the damage. "It left us in a position where a lot of people are questioning our company, whether it's a moral company, a proper company, respectful company," he told me. The negative feeling from customers and others in the industry was clear "and has certainly not been lost on any of us," he said. The company convened focus groups and found a noticeable negative turn. "The number of people enthusiastic about the company, the products, who would recommend, or would buy them, has clearly taken a dip. It's not cataclysmic. But it's clear."

The response also damaged Microsoft's credibility with Judge Jackson. He had ordered Microsoft only to "cease and desist" from the company's own practice. He hadn't prescribed the particulars of the new licensing terms the company should adopt. He later said he considered Microsoft's response so "untrustworthy" it colored his view of the company for the next two years.

"I found their compliance to be less than genuine," he said.

Cole was deployed to receive Jackson's wrath. In court a few weeks later, Jackson asked incredulously, "It seemed absolutely clear to you that I entered an order that required you distribute a product that would not work? Is that what you're telling me?"

Cole was a good soldier. "In plain English, yes," Cole told Jackson. "We followed that order. It wasn't my place to consider the consequences of that."

Gates insisted that he had had no choice but to remove every line of code that also appeared in the retail version of the browser. And the court of appeals later found that Microsoft's interpretation was indeed plausible.

"We did exactly what the order said to do. There was no freedom or flexibility," Gates said at a public event a month after the episode. "What did people say about that? How were we treated on that? Brutally, just brutally."

"I was not sitting there going, 'Ha, ha, I'll do what I want.' I was sitting there going, 'This is the worst thing that's ever happened to me. When can I get back to just focusing on developing software?' And then to have the press come out and say, you know, what it said, that felt bad."

Copyright (c) 2001 by David Bank

Pointers Permalink to Pointers

For further reading, see Scripting News for August 14, 2001.

A free public discussion group is running on Yahoo, including the author of the book.

Dave Winer

© Copyright 1994-2004 Dave Winer. Last update: 2/5/07; 10:50:05 AM Pacific. "There's no time like now."