Microsoft’s anti-trust consent decree expires 12th May–will the gloves come off with the shackles also?

Microsoft has been hamstrung for nearly a decade by a US anti-trust ruling which saw their every action supervised by 600 compliance officers  in the company, working to ensure Microsoft does not do anything which would risk leveraging their installed base of Windows users to enter other markets.

This has seen many of Microsoft’s more recent products not showing much integration with Microsoft’s main product, and making a very poor case for Windows users for buying other Microsoft products, in the end the intent of the ruling.

Other Microsoft competitors have not had their hands bound in the same way: Apple often boasts of how their 160 million credit card numbers, obtained by their iPod monopoly, guarantees their success when introducing new media products. Google, who has 85% of the worldwide search market, has used their internet dominance to enter several markets, often giving away their product for free, to the detriment of the current players. Garmin for example saw their share price drop from $127 to $31 over the last 4 years, while TomTom saw an even bigger drop from $64 to $4 over the same period.

A good example of a product which almost appears to be from a separate company is Windows Phone 7.  The Zune sync software has to be downloaded separately, and does not sync anything more than media and apps, with the iPhone able to sync more, contacts and calendar for example.  Compare this with Windows Mobile, developed before the consent decree, which synched directly with Outlook, was able to sync documents and other files, synched music with Windows Media Player and had tools for remote desktop access in both directions, they are clearly two very different products.

Despite Microsoft’s determination to run tablets on full desktop Windows, it is unlikely that these devices will be our main devices, given the constraints on screen size, processing power and flash storage.  Microsoft should make desktop (or laptop)  integration one of the main features of these devices, whether they run a full desktop OS or not.  With the consent decree out of the way, they will be much more free to do so, hopefully for Windows phone 7 also.

With the consent decree expiring, Microsoft will be much more free to pursue integration of their products, but of course the risk of future anti-trust action remains, in Europe and USA, not to mention by now an ingrained culture which eschews such efforts. We will have to see if any dramatic change in how Microsoft does business will come in the second half of 2011, but at least the company will be free to compete on an even field once again, using one of its main assets.