Also saw NSCP's bought and paid for mouthpiece Bork chimed in today with a recommendation to break the company up into three..
Let's get the full report on this.
Newsbytes News Network
(c) Copyright 1999 Post-Newsweek Business Information, Inc. All
rights reserved.
Sunday, January 17, 1999
Bork: Break Up Microsoft
Robert MacMillan, Newsbytes
WASHINGTON, DC, U.S.A., 1999 JAN 17 (NB). One-time Supreme Court nominee Judge Robert Bork Friday told reporters at a luncheon that Microsoft should be broken into three separate companies as a possible remedy if the Justice Department and 19 state attorneys general win their case against the software company.
Bork has been working for ProComp, a group of companies united in their support of the government's case against Microsoft, though he stressed at the meeting Friday that he was speaking his own mind, not any official position for ProComp. Bork also is on the payroll of Netscape Communications Corp. [NASDAQ:NSCP], a ProComp member, and one of the companies that claims to have been harmed by Microsoft's alleged behavior.
"The single, most efficient remedy may be three companies," Bork said. "(Although) one school of thought says that whoever gets Gates (becomes) a monopoly again."
The judge also suggested that an unbundling of the Internet Explorer Web browser from the Windows operating system could be a remedy if Judge Thomas Penfield Jackson rules against Microsoft in its antitrust trial, as could a permanent injunction that forbids Microsoft from forging exclusionary contracts with its partners that would hurt Microsoft's competitors.
He added, however, that these remedies might not have any effect on damage already done. As for the idea of unbundling Explorer from Windows, he said that "As long as (Microsoft) has the operating system monopoly, they haven't cured anything... In time, unbundling may lead to applications being written for the browser, and you may find other operating systems coming to market, but it could be a long process."
Microsoft currently is defending itself against charges from the Justice Department, 19 states and the District of Columbia that it is maintaining its domination of the operating system market, illegally, both through the inclusion of the Explorer with Windows and past contracts with partners that excluded Microsoft competitors from doing business with those companies.
The Justice Department last week wrapped up its presentation, and Microsoft already has called the first of an anticipated 12 witnesses.
Bork also predicted a 75 percent likelihood of some kind of judgment against Microsoft, but that he had doubts about the DC Court of Appeals' upholding Jackson's lower court ruling. The Supreme Court, he said, likely would sustain Jackson's ruling.
Bork is a former Appeals Court judge on the DC circuit. Nominated by former President Reagan to the Supreme Court, his views on a variety of issues - ultimately considered ultra-conservative by many members of the Senate - led to his removal from nomination.
Reported by Newsbytes News Network, newsbytes.com .
I think this is important. Recall that WSJ article Bork did where he laid out what he thought the DOJ's best case would be: monopoly maintenance through predation. That became essentially the government's case.
Now, Bork is saying exactly what was said on this thread and by Scott McNealy six months ago: Microsoft should be broken up into 3 identical companies, each with full access to all of Microsoft's intellectual property. As discussed in the Dow Jones article on this, this is not the old "applications company" vs. "operating system company" proposal of yore, but the proposal to break it up into undifferenciated components, each of which would compete against the others, potentially across the full range of Microsoft's product offerings.
Could it be that this will be the remedy that the government recommends after it wins its case? I think Bork's statement may be a signal that there is a very good chance of that.
Even though this is my personal favorite remedy (with making Windows open source second), there are nevertheless a number of issues that need to be addressed:
Specifically, no way on Earth will Microsoft agree to this. That means the remedy will have to be imposed involuntarily. That carries a number of ramifications:
(a) The remedy will have to stand up on appeal. The government's "network externalities"/"increasing returns" case is basically proving that Microsoft has a natural monopoly, which Microsoft is reinforcing through (allegedly, it says) predatory conduct. I am not sure that is the kind of case that is well suited to structural remedies such as this. Were this an "unnatural" monopoly, created and maintained through predatory conduct in a marketplace capable of supporting more than one firm based on the industry's marginal cost structure, this remedy would make a lot of sense. In the case of software, I think a strong argument can be made that a new natural monopoly will just emerge to replace the old one. Maybe Bork will say what I said, that such is a problem for the next generation of antitrust lawyers. Nevertheless, I think Microsoft could put together a pretty strong argument on appeal that the government's case does not support breaking up the company.
(b) Everyone would still want to work for Bill Gates. The government can break the company into three, but if everyone wants to work for Bill Gates, then his company will get all the quality people and will win in the end. The other two (or however many) companies would start out at an immediate and perhaps insurmountable disadvantage.
(c) And what about Chaz's argument (which I don't agree with, but still needs to be addressed) that the three companies will simply tear each other apart, as prices (and profits) drop to marginal cost, i.e., zero?
That said, I still agree this is the best choice of remedies, and the fact Bork is saying t substantially increases the odds it will happen, in my view. Still, I'd like to hear the responses to these objections.
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Finally, Schmalenese, the MIT economist, is a DISASTER for them. And they are going to follow him up with Paul Maritz, who will have have a tough time navigating through his own e-mail paper trail without setting off all the land mines contained therein. I am having a very hard time understanding the defense strategy at this point. It looks like they are front-loading their case with their two worst witnesses.
It's not as if Bill Gates was on drugs when he approved this, so what gives? |
