The megaplans of Microsoft

May 29, 1998

Created under Tony Benn's Ministry of Technology by a merger of Britain's best and biggest computer companies. Star of the 1980s Alvey programme of joint industrial and academic research. Latterly a strong supporter of "open systems" and proud of its ability to get almost anyone's computers and software working together.

Well, goodbye to all that. ICL has decided that its future is to deliver "solutions" based on products from the world's largest and most ambitious software company. Essentially it is becoming what the computer industry calls a "value added reseller" for Microsoft.

ICL has not really been a British company since 1990 when Japan's Fujitsu acquired a majority stake. So this moment cannot be compared with the sale of Rolls-Royce or Christie's. It is part of something more important than that: a struggle for world domination.

Microsoft is the subject of an anti-trust investigation by the US Department of Justice, and the world's eyes are on any event, such as the subjugation of a once-proud national computer company, which brings Microsoft closer to monopoly power.

Microsoft's accusers have focused on Internet Explorer, the company's web browser. Their worry is that Microsoft can use the browser to control what consumers read, watch or buy on the Internet. They are fighting this with the blunt instrument of United States competition law. Microsoft wants to supply the browser as part of the Windows 98 operating system. This is not a crazy idea. People use Windows to handle local information and a browser for networked information: merging the two, and using the Internet as an extension of your hard disk, makes a lot of sense.

There would be no need to stop Microsoft building Internet access into its operating system if it could be compelled to deliver an unbiased browser - one which does not steer consumers towards products and services selected by Microsoft. In a remarkable speech earlier this month to an audience invited by the consultancy London Economics, the retired Oftel regulator Don Cruickshank called for a unified regulatory regime for all operators of electronic communication systems. It would apply equally to Microsoft, BT or our own parent company News Corporation.

The basic rule would be that the consumer's equipment - browser, set-top box, telephone - must not materially obstruct their access to the information or entertainment of their choice. Universities and academics could then continue to educate and inform on the Internet without asking permission from "gatekeepers" whose priority is premium entertainment.

It is not an easy notion for the Americans: they do not like regulation even when it promotes competition. Even in the UK, Mr Cruickshank has found it hard to get through to politicians. Will the spectacle of Bill Gates towing away what was once the British computer industry persuade them it is time to act?

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