It's refreshing when someone calls a spade a spade....
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ANTITRUST EXTORTION
by Alan Reynolds
Somebody should write the book, "Antitrust for Fun and Profit." This game has two rules: Find a company with plenty of money, then sue from every direction and for any conceivable reason.
Federal or state antitrust suits are great fun, because legal fees are paid with taxpayers' money. But using political influence to get antitrust officials to hobble a company's competitors still requires costly lobbying and generous campaign contributions. Such influence-peddling often proves more costly than rewarding, leaving only the last resort of paying lawyers to file a private antitrust suit.
AOL-Time Warner and Sun Microsystems recently announced civil suits against Microsoft, apparently sensing the poor results of previous efforts to entice nine states to contest the federal deal. The states soon lost credibility by begging favors for industries never mentioned during the trial. Many of their corporate witnesses posing as mistreated underdogs are actually industry leaders.
The market for high-end servers is overwhelmingly dominated by UNIX hardware, notably from Sun Microsystems. Yet Sun worries that cheaper Windows servers might grab some of this lucrative business. Sun could cut prices to compete, but it figures it's cheaper to lobby and sue. Oracle likewise resents low prices for Microsoft database software. These industry leaders have been eager to bankroll this antitrust crusade on behalf of protecting their turf and keeping prices high.
Internet access is overwhelmingly dominated by AOL, with 34 million subscribers. Yet AOL worries that disgruntled customers have an attractive alternative in Microsoft's MSN.com. If Microsoft had been forced to divest MSN, as lobbyists hoped, it might have ended up no more dangerous to AOL than CompuServe was.
Multimedia software is overwhelmingly dominated by Real Player. Yet Real pretends to be gravely threatened by the mere existence of Microsoft's Media Player, even if access to it is hidden.
Handheld computers are overwhelmingly dominated by Palm. Palm demands a guided tour through Microsoft trade secrets, claiming Microsoft makes it difficult to link Palm files a Windows PC. But Palm users routinely do just that.
Many smaller companies hope to use antitrust to get something for nothing. Red Hat wants Microsoft to waste millions making Office work on Linux, even though Sun and Word Perfect offer such Linux software for little or nothing. Gateway lobbied to prohibit Microsoft from giving volume discounts to bigger rivals, but it now wants the old system back. Novell wants free technical help, or it will keep whining to Sen. Orrin Hatch, R-Novell. The list of companies trying to get their fists into Microsoft's deep pockets is endless.
As if double jeopardy from federal and state governments were not enough, Microsoft now faces the private vigilantes of AOL and Sun. Sun last sued Microsoft in 1997 for offering a version of the Java programming language that worked faster on Windows. As part of a settlement, Windows was allowed to contain only an older version of Java, and only for seven years. Under the new suit, Sun wants Windows XP to be required to include the newest Java. Justice argued there was already too much stuff bundled into Windows, but antitrust is nothing if not politically adaptable.
AOL-Time Warner seeks a cash prize for damage supposedly done to Netscape years ago. That sounds almost frivolous. AOL could easily make Netscape the No. 1 browser by basing the next AOL software on Netscape. Besides, any damage to Netscape alleged during the trial was fully reflected in the terms of AOL's post-trial takeover of that firm. AOL is asking to be compensated twice even though AOL itself evidently prefers Microsoft's browser.
For antitrust czars, endless antitrust games can be as profitable as they are fun. After launching the Microsoft case, the happy warrior Joel Klein was anointed chairman and chief executive of Bertelsmann's U.S. branch, a company that just happened to own a huge stake in AOL's European operations. It must have been Klein's inexperience in business that impressed them, not his antitrust connections.
For businesses, lobbying and suing for antitrust aid is always expensive and rarely fruitful. AOL's stock dropped 4 percent on the day it announced it was suing Microsoft, and AOL and Sun stocks are down by more than 25 percent so far this year.
When companies act like losers, the market believes them. In business, those who can do. And those who can't sue.
To find out more about Alan Reynolds, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2002 CREATORS SYNDICATE, INC.
Originally Published on Thursday April 4, 2002 |
