October 11, 1997



The Care and Feeding of Digital Behemoths




CHAPEL HILL, N.C. -- Litigators have been making lots of money this week, thanks to computer companies. Sun Microsystems sued the Microsoft Corporation for violating its exclusive control of the Java software used for the World Wide Web. The Justice Department is considering whether Worldcom's pending acquisition of MCI Communications would create an improper monopoly. The GTE Corporation has sued Netscape Communications and several other companies over an alleged monopoly of access to customers on the Internet.

And this is not that exceptional a week.

There are good reasons to be afraid of corporate monopolies, but digital monopolies are fundamentally different from the monopolies that Theodore Roosevelt busted in the early 20th century. As a result, the old framework to deal with monopolies -- like antitrust laws -- doesn't always apply here.

You simply cannot compare a company like Microsoft to corporate monopolies of old. Digital products tend to spawn monopolies if they live a long time; indeed, many digital products probably wouldn't exist without monopolistic companies like Microsoft.

Companies like Microsoft and Sun dominate niche segments of the business: Microsoft, which sells Windows, controls the operating systems market; Sun created Java, a language used for programming Web pages.

When it comes to software and other kinds of digital technology, this domination and its attendant conflicts come about because monopoly niches are inevitable.

Why? Two pieces of software must speak the exact same language to work together at all. As a result, the only way a computer system can work is if all its software use the same complex language -- and that language can't be translated easily into another system. The company that establishes the standard language, then, winds up establishing a monopoly for that particular niche.

For example, the Windows operating system is becoming more and more dominant in the personal computer world over Apple's Macintosh system.

Someday, one system will have to win out over the other. Keeping both alive for the long term would be like having two ypes of fax machines that couldn't talk to each other; everyone would have to own both types to send and receive faxes.

That's the reason Windows computers are becoming the standard in the world and not Macintoshes.

There are many positive sides to these digital monopolies. Monopolies reduce confusion as to what direction innovation should go.

Java is on its way to becoming a standard in the creation of World Wide Web sites. People are using the software because they know everyone else is using it, too. They know their work in Java will remain relevant and useful.

Also, all the important monopolies have been American. This provides our nation with a significant edge in international trade, and that edge should only increase with time.

Of course, digital monopolies are troubling. Microsoft and Intel, between them, can coerce millions of businesses and individuals to spend inordinate sums for upgrades just to stay compatible with other computers.

Even worse, the dominance of Microsoft's operating system has resulted in a decrease in the quality of computing. Millions of Americans are putting up with machines that have a tendency to crash and are more difficult to use than they should be.

Also, once one company has a monopoly in a niche, it can use its power to try to break into other niches. So a company can strong-arm the industry, forcing it to use inferior software as a standard only because it works with its other software.

Even Microsoft, the most aggressive company, is victim to other monopolies on occasion. Microsoft wants to tinker with Java, the World Wide Web programming language, to make it serve its own purposes. But Sun won't let it and is therefore suing Microsoft. So Microsoft is now captive to another monopoly in the same way its own customers are captive to Microsoft.

Even if one decided that the digital monopolies should be broken up, it isn't clear that there's any practical way to do so.

Digital monopolies can't be punished or restrained through antitrust laws, because the basis for the monopoly is usually a technological innovation that can't be broken up. You can't cut a code in half; splitting it up makes none of it work.

While antitrust laws can certainly be applied to many situations in the digital business world, we also need to think of new ways to deal with these monopolies.

One possibility would be to eventually put digital standards into the public domain, the way patents work. The company that originated a technology standard would be the sole owner of the information for a fixed period and could make a profit on it.

After that, the proprietary information would be open to the public so other companies could build on the ideas.

Many people in computer science have not given up hope for other technological solutions to the formation of digital monopolies.

Someday, perhaps there will be advances that would make software more interchangeable among systems. But niche monopolies are a difficult problem that will take a long time to solve.

In the meantime, we need a fresh debate about how the Government can best deal with digital monopolies.


Jaron Lanier is a visiting artist in the Interactive Telecommunications Program at New York University.



Copyright 1997 The New York Times Company



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