Good Morning Softees: This group of clippings was supplied to me by a longtime MSFT shareholder. It seems I have developed a cadre of supporters who lurk and supply me with clippings but fear to post because of the invective of people who post anti-MSFT rhetoric and who don't own the stock.
This filing by ACT will probably get more PR in other countries, not in the US. I read about it last night in the Financial Times (UK) but haven't seen it mentioned or discussed, on SI or CNBC. Is it old news? I don't think so.
Imagine, such a huge decision, with such major consequences, on the financial markets, on technology development, etc The DOJ trying to break up the biggest software company in the world, yet no one except Microsoft's competitors and the litigious state AG get their input heard. What a @#$%farce. Of course, the DOJ "mind" and Jackson's decisions had been reached before the trial began, imo, so it wouldn't make much difference but still....
<Jonathan Zuck, president of the ACT, said the legal precedent for widespread consultation had been set by the agreed break-up of AT & T, the telecommunications company, in the early 1980s. Under the so-called Tunney Act, the courts must give at least 60 days' notice for public comment before a proposed settlement can be approved.
"Our feeling is that the implications are so much greater than the AT & T case, and that the judge ought to hear from more people before making a ruling on such dramatic proposals," he said. >
I don't think this link will work, unless you register, it's free. Try news.ft.com
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From the Financial Times (UK)
Published: May 16 2000 21:15GMT | Last Updated: May 16 2000 21:24GMT
news.ft.com
US software group demands Microsoft hearing
By Richard Wolffe in Washington
A US software industry group attempted to intervene in the Microsoft antitrust lawsuit on Tuesday, by demanding to testify before courts on the impact of the proposed break-up of the world's largest software company.
The Association for Competitive Technology (ACT) filed a motion in court asking the trial judge in the landmark case to allow its members to describe the harm they would suffer under Microsoft's break-up.
The motion cites the case of small companies which already claim to have suffered because of the Justice Department's request to split Microsoft in two.
The Justice Department and 19 states, which are jointly suing the company, are scheduled to reply today to Microsoft's own "remedy" proposals, following the company's outright rejection of the break-up request last week. Microsoft offered instead to curb its business practices, claiming that break-up would cause unpredictable damage to the US economy.
According to ACT's motion filed on Tuesday, Active Designs, a small systems integrator from Fairfax, Virginia, claims to have lost business because of uncertainties over Microsoft's future. The company claims that a customer is delaying its deployment of Microsoft's Windows 2000 software based on concerns over the future of the Windows operating system.
Jonathan Zuck, president of the ACT, said the legal precedent for widespread consultation had been set by the agreed break-up of AT & T, the telecommunications company, in the early 1980s. Under the so-called Tunney Act, the courts must give at least 60 days' notice for public comment before a proposed settlement can be approved.
"Our feeling is that the implications are so much greater than the AT & T case, and that the judge ought to hear from more people before making a ruling on such dramatic proposals," he said.
The association has consistently backed Microsoft throughout the course of the two-year litigation, and strongly opposes breaking up the company.
Any wide-ranging consultation process would greatly delay the remedies phase of the trial, against the stated wishes of both Judge Thomas Penfield Jackson and the Justice Department. Both are keen to resolve the case rapidly, in line with the fast pace of the industry itself.
Joel Klein, head of the Justice Department's antitrust division, said on Tuesday it would not be appropriate to comment on decisions which Judge Jackson was in the process of making. Mr Klein said the filing on Wednesday would underline that "the remedy we proposed is correct", adding he hoped the case could be resolved "in a timely manner". Judge Jackson has scheduled a court hearing on the remedy proposals for May 24.
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You can post the articles if you want. I don't want to post and I prefer to remain
anonymous these days.
I've been a MSFT shareholder (the first stock I ever bought) since November 1995 and like the movie "I'm mad as Hell"
Here are some good excerpts, imo, from part of the ACT filing, from an economist-Liebowitz. The 'brief' is long, but good, imo. Shows the flaws in the DOJ position and how they will just satisfy MSFT competitors and hurt consumers.
Unlike Jackson, it looks like Liebowitz did his homework. Judge Jackson slept through a lot of the trial apparently. What a joke.
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actonline.org
DECLARATION OF STANLEY LIEBOWITZ
I. Qualifications
1. My name is Stanley Liebowitz. I am a professor of economics at the University of Texas at Dallas where I have been teaching since 1991. For three years up until last September I was also the academic associate dean. I have previously held positions at University of Rochester, University of Chicago, and North Carolina State University. I am on the editorial advisory board of the Journal of Network Industries, and am on the Advisory Board for the Center for the Digital Economy at the Heartland Institute. I received my undergraduate degree from Johns Hopkins University and my doctoral degree from UCLA.
2. I have been studying the economic impact of new technologies on market structure and intellectual property for two decades. Since 1988 I have been investigating, with my coauthor Stephen Margolis, whether, and under what conditions, an inferior product might be able to survive and win a contest against a superior challenger, to the detriment of the economy. I have recently co-authored a book with Margolis on this general topic, with the addition of a lengthy section empirically examining software markets. The book is titled: Winners, Losers, & Microsoft: Competition and Antitrust in High Technology.
.....
The analysis of Microsoft?s pricing strategy in Winners Losers & Microsoft provides a further indication that AppCo and OpCo would set prices above the levels set by Microsoft.[2] The analysis in the book revealed that prices fell dramatically in software markets during and after Microsoft?s rise to dominance, even when there had been no indication of a trend toward lower prices prior to Microsoft?s ascendance. The book also demonstrates that prices fell by a much greater percentage in markets where Microsoft competed (65%) than in markets where it did not compete (12%).[3] Therefore, Microsoft?s behavior in application markets can be classified as that of a price cutter, or a firm following a low-price strategy.
24. Provision 2.B.ii prevents the AppCo and OpCo from entering into agreements with one another to sell, distribute, or license the other firm?s products for a period of ten years after implementation of the breakup plan. This can be viewed as a restriction on trade between these two companies. Trade restrictions are almost always antithetical to the efficient working of markets and are no less harmful here, leading to almost certain inefficiencies and consumer harm. This provision would also appear to serve no function since the point of a breakup is that each company would then have a fiduciary duty to maximize its own profits. As such, each company would be expected to take actions that are in its own self-interest.
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Conclusions
87. Ensuring competition in the computer market does not require the destruction of Microsoft. Nor does it require its dismemberment. The government?s proposed remedy is reckless in that it doesn't? ?t attempt to carefully compare costs and benefits.
88. Before embarking on surgery as radical as that being proposed by the plaintiffs, it would seem that a precondition should be a clear expectation of benefits significantly larger than the costs, particularly since there is always some uncertainty in estimating economic magnitudes. The current proposed breakup fails to meet these preconditions.
89. Instead of clear and large benefits, we are presented with highly speculative suggestions of some possible additional competition, but only if one is willing to disregard the arguments previously put forward by the plaintiffs and accepted by the Court.
90. On the other hand, it is clear that the proposed breakup will impose costs. No one disputes that breakups are costly. Plaintiffs? own experts agree that software prices are likely to rise. The capricious allocation of products along with unnecessary rules forbidding trade between the split-up companies imposes clear and significant costs. The intentional handicapping of operating systems that played no role in this case will only work to decrease competition in the server and hand-held markets. Synergies will be lost.
91. It is also clear that this proposed breakup has the potential to very significantly lower the quality of the computing experience both within and without the desktop market.
92. It is impossible to conclude that the plaintiffs? remedy meets the preconditions required for a breakup. It isn't?t just that the benefits do not seem much larger than the costs, but quite the opposite, it seems rather apparent that the costs dwarf any likely benefits. The proposed structural component of the remedy will lead to decreased competition, higher prices, and lower quality, not the characteristics we normally hope for in antitrust remedies
93. The conduct components of the breakup also contain provisions that do not appear to have been well thought out. The potential exists for significant harm in some of these provisions, even when they are well intentioned. As such they seem likely to impose far greater costs than benefits.
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Below is the actual press release from ACT. Gee, I didn't hear CNBC mention this yesterday at all. They are only interested in the opinions of Microsoft's competitors. CNBC is so biased against MSFT, it is disgusting. Did you catch David Faber's nauseating interview of Scott Mcnealey? Faber asked Scott if he would let up in his attack on MSFT, now that they are down
(McNealey is on the board of GE, and Faber and all CNBC staff is very aware of this, constantly, as the BOD of GE can influence their stock options, and they suck up to McNealey. And that day, (last week) stupid Maria B kept repeating: "Hear what MSFT competitors think of MSFT's plan." What morons...
How about hearing from some consumers.. or some supporters of MSFT.
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competitive technology.org/events/motion.asp
P R E S S R E L E A S E
FOR IMMEDIATE RELEASE
Tuesday, May 16, 2000
For more information, contact:
Allison May Rosen 202 331 2130
arosen@ACTonline.org
ASSN FOR COMPETITIVE TECHNOLOGY SAYS COURT MUST CONSIDER IMPACT OF GOVERNMENT'S PLAN ON REST OF INDUSTRY IN MICROSOFT CASE
Group to file a motion in federal court requesting that the Judge allow IT firms caught in the trial's crossfire to testify on harms to their businesses and customers
WASHINGTON, DC - The Association for Competitive Technology will file today a motion in federal court requesting that companies affected by the government's breakup proposal be allowed to testify as to the harm it would bring to their business and customers. ACT requests that its member companies, as well as other IT firms, be given an opportunity to participate in the remedy phase of this case because they are directly affected by the ultimate remedy.
"So far, this case has been a battle between the titans," said ACT President Jonathan Zuck. "It's high time that all get a sense of the impact the government's extreme proposal would have on those getting caught in the cross fire - the tech entrepreneurs."
"You may not see these emerging companies on the cover of Fortune or PC Week, but they are the ones that are truly driving America's economy," Mr. Zuck added. "They are the ones developing the thousands of applications that bring computing to its full potential. And to make such drastic changes to their business without their consideration would truly be a crime."
ACT, which previously submitted a friend of the court brief prior to the Judge's conclusions of law, now seeks to become involved in the remedies phase by having firms outline the adverse impact the government's proposal would have, particularly on software vendors.
Along with the motion, ACT filed a series of statements that support its position on hearing from affected third parties. The statements, from an economist and several technology professionals, identify specific scenarios that help to describe the major disruptions that would occur under the government's plan - disruptions that would result in less consumer choice and higher overall technology costs.
"Do we really want to mess with the winning formula that to date has produced such stellar results for tech innovation and the American economy?" asked Mr. Zuck. "By getting the government involved in deciding what technology wins and loses changes the whole dynamic of the tech sector where consumers are making those choices today."
ACT is a national education and advocacy group for the technology industry. Representing mostly small- and mid-sized companies, ACT is the industry's strongest voice when it comes to preserving competition and innovation in the high tech sector. ACT's membership includes businesses involved in all aspects of the IT sector including computer software and hardware development, IT consulting and training, dot-coms. |
