The government's stance against Microsoft, as harsh as ever in the last round of arguments Tuesday, may cause Microsoft to end up the loser. But while Microsoft is taking a beating in Judge Jackson's court, it is winning the day in the court of California public opinion, according to a recent poll.

A statewide poll by Mason-Dixon Polling & Research shows that 62 percent of Californians oppose government efforts to break up Microsoft into separate companies. And despite government claims of the company's purported monopoly, 60 percent of Californians believe that Microsoft faces fierce competition.

Californians understand what the Department of Justice has missed—that even without government intervention, Microsoft's market share will plummet as new competitors enter the market, wielding a model in which software will be delivered over the Internet.

Instead of buying programs, users will rent software from Applications Service Providers (ASPs) or get it for free in exchange for viewing advertisements. And the newly-formed AOL/Time Warner—a $150 billion company with a vast network of high-speed Internet lines and 20 million subscribers, compared to MSN's 2.5 million—is positioned to dominate the new market.

Software applications are no longer exclusively linked to operating systems. Any browser can run applications, just as any operating system can access them. As web-based software grows in popularity and PC-based software becomes obsolete, customers will focus on browsers and the features they offer, while operating systems take a back seat. Already, many companies are ditching efforts to compete in the PC-based market in favor of developing web-based products.

In August, 1999, Sun Microsystems bought Star Division, a company that produces software similar to Microsoft Office called StarOffice. Offered for free to anyone with access to the web, StarOffice looks and feels just like Word, without the shrink-wrap. An added benefit is that it not only runs on the Windows platform, but on Linux and Sun's own Solaris as well.

According to high-tech experts, the new web-based software, which runs on remote servers, will eventually slice away the dominance of Microsoft's office products. This trend toward web-based software explains why, in 1998, AOL was willing to pay $10 billion for Netscape, a company that controls 42 percent of the browser market. Browsers are the technology of the future and will probably hold the highest profits in coming years. Portals will likely drive Internet traffic, with Netscape/AOL/Time Warner leading the way.

Judge Thomas Penfield Jackson discounted the threat of all competing operating systems and browsers to Microsoft's market share by narrowly circumscribing the relevant market, counting only operating systems for single-user desktop PCs that use an Intel-compatible microchip. Microsoft holds an 85 to 90 percent market share, but that market is rapidly shrinking.

The Justice Department has conceded that browsers, such as Netscape, pose a direct threat to the Windows market share. But if browsers are clearly a rival to Windows, then why doesn't the government include them as part of the relevant market? The reason is obvious.

If the government were to count non-Intel-compatible operating systems and browsers as competitors to Windows, as most Californians apparently do, Microsoft would be seen for what it is—a strong force in the market struggling against fierce competition to maintain its share.

It's time for government to remove its myopic specs and see that a popular product does not a monopolist make.

* Helen Chaney is a policy fellow in the Center for Freedom & Technology at the San Francisco-based Pacific Research Institute for Public Policy.

For additional information, contact Helen Chaney at (415) 989-0833.