Microsoft: Justice Scrutiny Is 'Crazy'

A Microsoft executive defends the company's venture into the online service business as a benefit for customers

He keeps going and going and going. He has more energy than the Energizer Bunny, but when Steve Ballmer, Microsoft's executive vice president for worldwide sales and support, dropped by the nation's capital, he slowed down for an interview. Promoting Windows 95, he said the product addresses "the sins of the past" [like an unfriendly user interface] and will serve as the bridge between old and new applications. Ballmer could not help but share his not-so-reserved views, however, on the Justice Department inquiries into the Microsoft Network and the company's planned acquisition of Intuit.

WT: How do you feel about the Justice Department's interest and concern over Microsoft's entry into the online service market? Do you think it was blown out of proportion?

BALLMER: It's not an issue of in proportion or out of proportion. It's almost -- how should I say this politely -- crazy. What we're doing is precisely the right thing under the law and economy of this country. We're creating the best product we can. We're not bundling it with any other product because you've still got to pay for the Microsoft Network. We're distributing it broadly, competing aggressively and trying to improve our product and bring down the prices to benefit the customer.

That is what the laws were written for, and instead, somebody's trying to say this is bad. The laws were not designed to stop competition. The laws were designed to promote competition that leads to better value for the customer. And that's what's going on right now. I think our entry into the online service has done more to bring down the prices and improve the quality of online services than anything else.

That is the desired effect of our laws. But the Justice Department wants to get into the game and regulate things in such a way that the customer has to pay more money and receive a less superior solution.

WT:What about the Intuit deal? Was that the same thing?

BALLMER: That was good for us and good for the customers. I don't think the market is a narrow one. We're really talking about the market for software that helps people invest, shop and manage money. That's a very broad market that banks and insurance companies will all be in. Unfortunately, the Justice Department didn't see it that way, and they did, in that case, have the opportunity to hold us off for up to a year and a half even if we had prevailed in court. Finally, we just said, 'we've got to move on.'

WT: Does all this government scrutiny make Microsoft less aggressive because the Justice Department might find something wrong with the next thing you try to do?

BALLMER: No. We tell our employees to ignore it. Our employees have to worry about making great products, selling them, pricing them to the best advantage of the customer and supporting the customer. We tell them, 'just do your job. Focus on your customer.' I think that's [what is] dangerous -- the government is causing us to take actions that would lead to poor products, bad prices and poor customer support.

WT: Do you think all this misunderstanding, as you describe it, is a result of Microsoft simply not getting its message across?

BALLMER: It does cause us to wonder whether we're telling our story very well because people seem to get so confused. How can people get confused that what's good for the customer is bad for the customer? Yet that seems to be what's happening.

WT: How do you feel about Congress' regulating online services?

BALLMER: Right now, there are important bills about regulation of online services in terms of decency, pornography and censorship. Those are very important issues, and there's a role for the government to play. We want our opinions expressed, and we do that.

How do you trade off certain decency concerns, parental concerns and First Amendment protection concerns? The government needs to play its role, and business needs to play its role.

Believe me, we want to make sure that in our software we give parents good control. If you go to a hotel today, and you don't want your children to watch certain movies, you can do that. We need to give parents the tools that are important to turn off certain content on the Internet. That's part of our job. Now the government also has its job to do, and we hope they'll do it in a prudent, bright and smart way.

WT: Microsoft has launched a federal consulting group. Won't that compete with the consulting services provided by the primes you team with?

BALLMER: It gives us a resource we can put out on a subcontract basis to people who want to bid a technical expertise in our product. We are in no position to compete with them. That's not our business.

Let's say you're doing a huge project for an agency. Wouldn't it be nice if the prime on that had one or two Microsoft technical architects? Then they could architect how our product would fit into some overall solution. That's the core of our product consulting. It's a limited, high-level technical architecture role.

WT: When IBM bought Lotus, the general consensus was it was IBM's attempt at...

BALLMER: Taking us down.

WT: How do you feel about that?

BALLMER: Well, they're working on it. And we're working hard to make sure it doesn't happen. We've just got to keep pushing our office applications to keep ahead of Lotus, and we've got to make sure we stay the leader in electronic mail.

WT: But what about groupware?

BALLMER: The most important thing about groupware is to be the best at mail. Lotus is not a good mail product. If you asked what job one is for group communications, it's electronic mail.

WT: A new Forrester Research Group report predicts advertising will be the biggest thing on the Internet. What do you think?

BALLMER: Communicating and informing. Advertising is sort of communicating and informing, but take our technical support database. Nobody would ever call that advertising, but it'll be available on the Internet. If I'm not forced to look at a movie trailer, it's not really advertising. Let's say my wife and I want to see a movie, and we haven't seen any of the trailers. Why not be able to see the trailers? That would be a service to me, not advertising.

WT: How do you see the infotech and entertainment industries converging?

BALLMER: There's this thing called CD Plus, which we're working on with Sony and Philips. If you put the CD in the player, you could listen to Bob Dylan. But not only are you listening to Bob Dylan, you can see the lyrics, the musical score and Bob Dylan. All of that's encoded on the same CD as the music, but it's digital information on him.

We're working with the music industry to get them to add this content to every music CD. There are a lot of recording artists that have expressed interest in this. Record companies are saying 'you're dead in the record business in the next two years if your CDs aren't all CD Plus.'

WT: I'm sure you want to talk Windows 95. Some Fortune 500 companies said they don't plan to scoop up Win 95 right away. Do you think you'll face the same hesitation in the federal market?

BALLMER: The commercial market [won't] move that slowly, but the federal market traditionally has moved faster than commercial markets. I don't think this would be an exception.

It's particularly important for the people doing the procurements to think about not only today's applications, but tomorrow's applications as well.

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