Bill Gates vs The Internet, Part 2

[David Farber <farber () central cis upenn edu>]

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Amusing Rants from Dave Winer's Desktop
Posted on 1/23/95; 9:31:41 AM PST
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  As reported in "A Week Without DaveNet?" released on 1/20/95, I
  worked with Philip Elmer-DeWitt, ped () well com on his piece about
  Bill Gates and the Internet.


  The story is out, and it's great!


  I asked for permission to run this piece on DaveNet. Here's what they
  said:


  "Permission granted for this one-time noncommercial use provided
  the copyright line is included, along with the words: Reposted with
  permission. If your subscribers want to know about getting
  permission to use a TIME article, they may write timeletter () aol com
  for permission to reprint and ped () well com for permission to
  repost."


  Reposted with permission.


  Yeah!


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  ***Will Gates Get the Net?


  Microsoft's chairman says it is a make-or-break business for him,
  but the Internet's users may resist his long reach


  By Philip Elmer-DeWitt, ped () well com


  It has all the makings of a classic power grab. Bill Gates, the richest
  man in America and chairman of the world's largest PC software
  company, announces that his next business target is the Internet,
  the world's biggest -- and most chaotic -- computer network. The move
  instantly becomes topic No. 1 in boardrooms and on electronic
  bulletin boards around the world. The assumption is that Gates,
  whose software runs 9 out of 10 personal computers, will do to the
  Internet what he did to the PC industry: seize control of key
  chokepoints and leverage his advantage to extend Microsoft's
  domination.


  Gates' strategy -- as laid out in a series of public appearances over
  the past two weeks -- certainly makes sense. Before the end of the
  year, Microsoft will begin offering "one-button" access to the
  Internet to anyone who buys Windows 95, the newest version of its
  wildly successful Macintosh-like point-and-click system (60
  million copies sold). Given the Internet's well-deserved
  reputation as a difficult place to reach, Microsoft's promise of a
  one-stop, easy-to-use gateway ("just click on this button and
  you're there") is sure to attract a lot of first-time users.


  The vehicle for this is Microsoft's first online service, the
  Microsoft Network (MSN), which Gates unveiled this month. In a
  typical Gates marketing ploy, the network software comes bundled
  with every copy of Windows 95. This gives his offering an edge over
  every other online service promising access to the Internet. "The
  numbers are pretty simple," says Allen Weiner, an analyst at
  Dataquest. If only 10% of the 30 million people expected to buy
  Windows 95 this year click on the button that lets them connect to MSN
  -- and through it, the Internet -- that's 3 million customers in the
  first year, more than Prodigy and America Online have amassed
  between them in nearly a decade.


  But can Gates really control the Internet? For a variety of reasons --
  some structural, some cultural -- that may not be as easy as it seems.
  "Microsoft would have a better chance at controlling the weather,"
  says Brad Templeton, president of ClariNet, which makes a nice
  profit selling news wire services to Internet users. The Internet,
  he explains, has no central network operating system that Microsoft
  can patent and control. Moreover, the Internet is devoted to open --
  that is to say, nonproprietary -- software systems. A week after the
  Internet community discovered that the GIF (Graphics Interchange
  Format) system used to exchange pictures over the network contained
  a patented compression scheme and that the patent holder was
  demanding royalty payments, somebody came up with an alternative:
  GEF, a graphics-exchange format that worked just like GIF but was
  patent-free.


  Even if the Microsoft Network becomes one of the most popular
  on-ramps to the Internet, that still doesn't give Gates dominion
  over the whole network. As Microsoft is quick to point out, the
  Internet access business is intensely competitive; already
  CompuServe, America Online and Prodigy are scrambling to catch up to
  dozens of small, feisty Internet access providers like Netcom and
  the Pipeline that promise faster service at lower prices, and these
  companies could soon be joined by some outfits that are even bigger
  than Microsoft and have a closer relationship to their customers:
  the phone companies.


  But Microsoft is exploring other ways to make money off the Internet.
  Last October it announced that it was buying Intuit, maker of the
  leading check-writing (Quicken) and tax-preparation (TurboTax,
  MacInTax) programs. But the acquisition was challenged in federal
  court last week by five anonymous software companies that argued
  that the deal, and a related agreement between Microsoft and Visa,
  will allow Gates to corner the market on online financial
  transactions, taking a cut of every bill paid and every purchase made
  in the online "shopping malls" springing up on the Internet's World
  Wide Web.


  Gates is not the only one trying to horn in on this market. Every major
  bank and credit-card company sees financial transactions on the
  Internet as a huge business opportunity. There are even plans afoot
  to replace the expensive Electronic Funds Transfer System used by
  banks to exchange credit with a system of encrypted transactions
  carried over the cheapest available open network, which is to say,
  the Internet.


  There are some who argue that Gates may be overreaching by taking on
  the Internet -- that online services could become, as an America
  Online executive put it, "Microsoft's Vietnam." Dave Winer,
  president of a Silicon Valley software company called UserLand,
  sees the extraordinary growth of the Internet as a rebellion against
  Microsoft. "The users outfoxed us," he says. "While the software
  industry was following Bill Gates, the users went another way. They
  took control. And once the users take control, they never give it
  back."


  And judging from the traffic on the Usenet newsgroup called
  alt.fan.bill-gates (but hardly a fan club), the last person in the
  world to whom Internet users would willingly yield control is the
  chairman of Microsoft. "The Net has a culture," says John Perry
  Barlow, co-founder of the Electronic Frontier Foundation.
  "Everyone who goes there takes on some of it. And that culture has a
  strong immune response to Bill Gates and Microsoft."


  Copyright 1995 Time Inc. All rights reserved.
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  Thank you Philip, and thank you Time!


  Dave Winer


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