Adobe Buys Macromedia

I'll have more to say later, but this is little more than proof that the Microsoft-era antitrust standard is alive and disturbingly healthy. It goes like this:

There is no antitrust standard, and there will be no enforcement.

Comments

[Del]

Those that don't study history are destined to repeat it. It's 1920 all over again. This time it's software not oil.

The scarier thing for me is Intuit. They own Turbotax, Quicken, and force everyone through their servers to send taxes to IRS. Now that's scary, or a theft timebomb eaiting to happen.

[Del]

Those that don't study history are destined to repeat it. It's 1920 all over again. This time it's software not oil.

The scarier thing for me is Intuit. They own Turbotax, Quicken, and force everyone through their servers to send taxes to IRS. Now that's scary, or a theft timebomb eaiting to happen.

[Joe I.]

Dan-

If we take your premise that antitrust laws are not being enforced I would much rather see these two companies join forces and be a bigger gorilla in the media and design software business and stand up to Microsoft. If not MS might someday have purchased one of these companies and become even stonger. Yes there will be layoffs and product mergers/kill offs where the two used to compete but perhaps this will make a stronger multi-platform company (read MAC OS and Linux) in the future.

[excuseme]

Excuse me, but the "announcement" of a putative merger signals the beginning, not the end, of potential antitrust review.

If you are fair minded at all (which I suppose you're not), you would await the response by the Justice Department and the FTC to this announcement.

If you cared at all about the outcome (which I suppose you don't, it's just "HATE BUSH" here), you'd be advocating that your readers contact the Justice Department, FTC and elected representatives to press the case.

Or, I suppose you may simply be ignorant of the workings of the process (which I suppose you likely are).

[Dan Gillmor]

"excuseme" -- I'm absolutely predicting that the purported review will be a rubber stamp, a fairly safe bet given the administration's record. There was a moment of hope in the Oracle-PeopleSoft merger, but the department put on a weak case and didn't even bother to appeal when it lost. Meanwhile, the Antitrust Division continues to allow Microsoft to thumb its nose at serious enforcement even of the ridiculously weak-kneeded consent decree -- more like a government cave-in.

The announcement by Adobe and Macromedia is testament to the lack of enforcement we now have. I strongly doubt they'd have considered this during the last administration, which belatedly -- better late than never -- did enforce antitrust law in the software industry.

[Ned Ulbricht]

David Boies appears to share your view on the post Microsoft antitrust standardor lack of it.

David Boies, of course, defended IBM in the government's long-running antitrust action against IBM. Later, he prosecuted the government's antitrust case against Microsoft. Now he represents The SCO Group in its current dispute with IBM.

If you carefully examine SCO's Revised Supplemental Response to IBM's First and Second Set of Interrogatories together with other case documents, I think you can discern The SCO Group's theory of the 1985
contract that IBM entered into with (originally) ATT. In that erajust after ATT had been broken up by an antitrust caseneither IBM nor ATT would have entered into an unlawful Unix trust.
But, in this era, Mr. Boies seems to think he can make a credible argument that IBM contracted not to use its own code except in an operating system sub-licensed from ATT. In other words, Mr. Boies seems to think he can argue that IBM agreed not to compete with ATT.

[rone]

Del: i (well, my wife) used H&R Block's TaxCut this year (and last year), not TurboTax. So i'm not sure that your Intuit worries are wholly warranted.

[excuseme]

Ned wrote: "David Boies, of course, defended IBM in the government's long-running antitrust action against IBM. Later ..."

Remarkable. This blog attempts to pass itself off as serious analysis. But Dan makes obvious mistakes about how the process works. And now here comes a comment from a reader who doesn't know the first thing about David Boies' background.

He didn't "defend IBM". Far from it, he carried bags and did limited legal research as a junior Associate for Tom Barr, lead outside counsel for IBM, during the last two years prior to the settlement. He never had direct conversations with any of the parties, never conducted any negotiations, never opened his mouth in court.

What disqualifies David Boies from being taken seriously is not the strategy put together by his boss twice removed or the client of his firm. It's his stepping into a fiercely partisan role driving "former President-elect" Al Gore's challenge to the certified results of the 2000 election. Boies' efforts put everything accomplished in the case against Microsoft in question to fair minded non-partisans. It was Gore's extremely poor judgment, and Boies' utter lack thereof, that so predisposed the incoming Ashcroft Justice Department to accept the judgment of the D.C. Court of Appeals that reversed the conclusion of the Microsoft penalty phase.

Boies' efforts were laughed out of that appeals court, and subsequently, he was laughed out of the U.S. Supreme Court that ruled 7-2 against him (and Gore) in the most substantive parts of the case.

The ignorance dripping from this blog reveals its true nature: unthinking, uninformed left wing pablum.

[Usher Lieberman]

If monopoly power is your concern, the good news is that globalization means a merger such as this is likely also subject to European review which tends more towards trust busting.

That said, I don't really have a problem with a monopoly developing in any one sector of software as the pace of technology tends to ensure that a challenger will emerge and more frequently the challengers seem to be some variant of open source that really pushes the incumbent to make better software or lose share.

Activity like this merger is painful for individuals (I know this personally) but ultimately healthy for the system (creative destruction.)

On a side not, I am happy to see that a Boies historian has come to set the record straight. If only Mr. Boies himself were here…

"I'm Marshall Mcluhan and I've been listening to what you've been saying. You know nothing of my work..."

[Steve Shepard]

Dan,

Given that there are viable alternatives (both commercial and open source) to the products of the combined company, why do you think the government should intervene?

[Dan Gillmor]

Steve, I'm not sure this case does deserve a look given the circumstances in which we now find ourselves. Since the government has given Microsoft such a free hand to continue its predatory practices, the best way to preserve even a modicum of competition may well be to let a couple or few other companies bulk up as much as possible. It's a lousy alternative to what we should have had, which is more vibrant competition among a larger group of players. Least worst choice?

By the way, I'm not sure, but it's starting to look like my old troll is back, posting under "excuseme" this time. I note his bizarre theory (maintained in precisely the same way by my old blog's troll) that David Boies' representation of Gore led Ashcroft to go into the tank on a case his predecessor's Justice Department had won overwhelmingly (including, for the most part, in the Appeals Court). I further note "excuseme's" right-wing virulence. His IP address is from the same ISP. And he's prone to making flat statements that, upon even a little checking, prove at best questionable (for example, he claims Boies was a mere water-carrier for Barr in the IBM case; James Stewart, the brilliant financial journalist who was a lawyer with the same firm at the time, wrote in 2002 that "One of (Barr's) top partners on the case was David Boies," hardly suggesting Boies was a flunky).

Reminder to all: I have a hair trigger here on trolling. Trolls and their postings will be removed, period.

[Usher Lieberman]

The government didn't create Microsoft. Microsoft managed to become the predatory beast that it is on its own. I think the competitive landscape is vibrant because of the rise of open systems. I think Microsoft and any monopoly will always be challenged by a more transparent system and in technology open systems preserve more than a modicum of competition.

The government will always get a lot of things wrong, but they do seem to get the message about open systems. Ask a government IT manager or CIO sometime about how they're using open systems and why they're interested in them. It's not because open systems encourage competition, but because the competition produces the best results.

[Ray Everett-Church]

My spouse makes his living using Macromedia's Flash software. He and his fellow Flash designers/developers are more than a little dismayed by this news. Adobe tried to compete against Macromedia in the digital media design tool space and lost miserably. I think their purchase of Macromedia is evidence of that realization. But part of why Adobe failed, and part of why Macromedia succeeded, is their radically different approaches to software development. Adobe has always taken a "our way or the highway" approach and never missed an opportunity to ignore the thoughts and concerns of day-to-day enterprise users when developing their software. (E.g., Adobe's two flagship applications, Photoshop and Illustrator, which are frequently used in tandem by many designers, have confusingly different interfaces and icons for nearly identical functions.)

Meanwhile, Macromedia has a hugely active developer community to which Macromedia listens closely (sometimes too closely!) and the growth and development of their products has reflected that community's input. Today, the single greatest fear among some of Macromedia's most important users -- the developers who make Flash content -- is that Adobe will apply its traditionally pig-headed and stop incorporating the input of the developer community which has helped shape the products in ways people actually desire.

Adobe's purchase of Macromedia suggests that Adobe recognizes, and is even paying a premium, because Macromedia beat them soundly. Now we wait and see if Adobe's real goal was to be the last company standing, and customers be damned.

[Dan Gray]

Having had the good fortune to work with the LiveMotion development team, I have a fairly unique perspective on Adobe missing the mark. With the LiveMotion vs Flash battle, Adobe tried to take on Macromedia head-on ... a big gamble with an entrenched customer base.

LiveMotion would still be a live product if Adobe had taken a different route, by bringing the ghost of Aldus Persuasion into a play for the PowerPoint space. Ah, but that's history.

As this all sorts out, it will be interesting to watch what stays, what gets tossed, and what gets spun off ...

[tiagón]

Oh, it's so easy - why bother to compete when you can buy the whole thing?

[Al]

Don't forget the software industry is maturing. Like the automobile business many years ago, there will be fewer competitors. As some parts of development become more "automated" and more processes are introduced, the art portion of programming will diminish. In other words, companies will be able to squeeze more productivity out. Margins will go down and mergers will go up.

You can see it by how companies buy software now. In the past, they bought it because it was cool and everyone was doing it (dotcom era). Now if you used to say your software is going to save $100,000, you could use some sort of value pricing - irrespective of the cost to produce the software. No more. Companies either will create the software themselves or pay some margin over the cost. The days of big margins are limited. See this too: http://www.forbes.com/business/forbes/2004/0329/090.html It's called "A Hard Landing For Software" So it's no wonder that the some companies will be swallowed up!

[jerry]

Yeah, the merger may not take place. Of course Adobe is so sure it will, the Macromedia sign is already on the ground (see SFGate).

Del, those that click twice are destined to repeat too!

[Keid]

Hi all,
I think that the right assessment of whether or not the FTC would block the deal is just consider the market share of the products they have in overlap (Freehand - Illustrator, Fireworks -Photoshop, Dreamweaver - GoLive). So, I am wondering if somebody here has any idea or sense of the market share of these products. The most populars it's easy to say: Illustrator, Dreamweaver and Photoshop, but this is useless without the real numbers (revenues for each product, market share, etc.)
As I am a shareholder of MACR I hope this deal closes and that my premium would not go away :(

Thanks

[lifting]

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