The Government's case, Schmalensee wrote in his direct testimony, amounts to "speculation" based on a "morass of e-mails" from Microsoft executives that at first glance may seem damaging, but are not. Forget the atmospherics, he tells the court, and focus on the outcome -- what he insists is a lack of measurable harm, current or future, to consumers from Microsoft's business practices.
"Proper economic inquiry into whether a company is engaged in anticompetitive conduct should end if it concludes that consumers have not been harmed by the conduct at issue and are not likely to be harmed in the future," Schmalensee wrote.... In his testimony, Schmalensee describes the suit by the Justice Department and 19 states as "fundamentally inconsistent."
The Government asserts, he notes, that Microsoft has an enduring monopoly because its Windows operating system controls the basic operations on more than 90 percent of personal computers sold, and that barriers to entry in that market are high. On the other hand, he adds, the Government says that Microsoft invested hundreds of millions of dollars because it was scared of losing its dominance to an upstart maker of Internet browser software, the Netscape Communications Corporation. "What is striking about the late-night e-mails and the almost frantic concern over competitive threats is that they show that Microsoft itself was extremely insecure about its leadership in operating systems," Schmalensee said. |
