Here is a very interesting (June 14)article on anti-trust cases (with lots of references to MSFT) with commentary by famous economists and even "trustbuster" himself, Joel Klein. Read the last paragraph (Klein's comments) in which he states that the DOJ's interventions will be "modest" and "surgical".
Either the DOJ/States are going to back down in their demands or MSFT is going to drag this case through appeals-expecting a reversal from "conservative" judges.
MSFT is a great buy once you digest all of the earnings potential along with all the negativity from the trial.
washtimes.com
Antitrust enthusiasm seen as a big bust to businesses
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By Patrice Hill
THE WASHINGTON TIMES
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Government trustbusters are pursuing big-name companies like Microsoft with a zeal not seen in decades, but top economists are questioning whether the new activism is justified given today's fierce business competition and low prices.
Household names like American Airlines, MasterCard, Visa, Intel and Office Depot have come under attack for purportedly obstructing competition, though economists regard their markets as among the most competitive in modern times, with consumers often confused if not dazzled by the array of choices.
Prices for air fares, credit cards, computers and software have been more notable in recent years for dropping than for rising, as would be expected in markets with little competition like those dominated by the oil cartels in the 1970s, economists say.
Yet the pace of new investigations and lawsuits by the Justice Department and Federal Trade Commission has picked up even as prices and the overall inflation rate declined to 30-year lows.
By targeting the nation's richest man, Microsoft Chief Executive Bill Gates, and some of the country's best-known corporations, the trustbusters also have touched off a political war with high stakes. Voters in the 2000 elections will decide which party controls not only the White House but the narrowly divided House of Representatives.
Before the Justice Department targeted software giant Microsoft in an antitrust trial that has already lasted several months, Mr. Gates was not a major contributor to political causes or parties. But when the department took sides in the lawsuit with Microsoft's Silicon Valley competitors -- many of whom are contributors to the Democratic Party -- that appeared to drive him into the Republican camp.
Now, GOP think tanks and activist groups like the National Taxpayers Union have weighed in with Microsoft. Some, like the conservative Heritage Foundation, are calling for the repeal of century-old antitrust laws to prevent the department from waging politically tinged lawsuits in the future.
The GOP-controlled Joint Economic Committee next week is showcasing Mr. Gates in a high-tech summit, while the White House cultivates its extensive ties with other high-tech entrepreneurs and trial lawyers who also benefit from the government's renewed activism.
For many economists, the political feeding frenzy -- and the specter of time-tested laws being used to wage ill-conceived suits -- is sickening.
In an open letter to President Clinton, 240 academic economists this month protested that many of the government's cases in the last year have been brought on behalf of competitors, not consumers. Yet the laws were designed to protect the public, not businesses, from predatory practices.
"Some firms have sought to handicap their rivals' races by turning to government for protection," pouring their energies into politics instead of competition, the economists wrote.
The result may be to "weaken successful U.S. firms and impede their competitiveness abroad," they said.
"The great mistake Silicon Valley has made is they called government in on themselves," said Nobel laureate Milton Friedman in a recent talk with John Berthoud, president of the National Taxpayers Union.
Mr. Friedman worries that the nation's high-tech industry, which rose to prominence with robust competition and now leads the world in innovation, will be dragged down by government meddling.
"They're going to spend in legal fees over the next ten or twenty years money which society would benefit from much more if it were spent [on the] Internet, home computers and the rest," he said.
Edward Yardeni, chief economist of Deutsche Morgan Grenfell Inc. in New York, said aggressive competition by Microsoft, Intel and other companies targeted by the government should be credited in part for licking inflation during the 1990s.
"I'm not saying Microsoft is clean -- everybody recognizes they sometimes play dirty pool -- but if the choice is letting Microsoft be Microsoft or letting the government decide what they do, I'd rather take my chances with the marketplace."
Mr. Yardeni said the government has not proved that any harm came to consumers from Microsoft's attempts to prevent computer makers from offering operating systems that compete with Windows and Internet browsers that compete with Microsoft's Explorer.
Windows became the dominant operating system not because Microsoft bullied all its competitors but because consumers chose it, he said. And the competing browser, Netscape Navigator, can be downloaded for free over the Internet.
"I'm not quite sure what we're protecting consumers from," Mr. Yardeni said. "Antitrust is supposed to protect the consumers, not the producers. There's nothing at all wrong with producers harming each other if in that process they basically benefit the consumer. Competition is supposed to be cutthroat."
Microsoft and chip maker Intel don't act like monopolists, he said. Instead, they're constantly looking over their shoulders, innovating and creating new models that make their last ones obsolete the moment they hit store shelves, out of fear that some other producer will do so if they don't, he said.
"I'm not sure the government appreciates how dynamic, fluid and competitive the technology sector is," he said. "There's no reason for the government to meddle."
Like other analysts, Mr. Yardeni said the government's case against Microsoft weakened when Sterling, Va.-based America Online bought Netscape this year, creating a big-money partnership that enables AOL to go head to head with Microsoft.
The government should have been cautious about pursuing the Microsoft case, he said, in light of the damage done in its nine-year case against IBM, which many economists believe weakened the computer giant at a time when it needed to keep up with tough Japanese competitors.
The government's complaint that MasterCard and Visa have been inhibiting competition in credit cards also is perplexing, said Mr. Yardeni and other economists, in the light of the dazzling choices consumers confront every time they open their mail.
Howard Metzenbaum, former Democratic senator and president of the Consumer Federation of the America, said he sees no lack of competition in the credit-card market.
"I cannot open my mail without another one or two solicitations from credit-card companies. I have never seen such saturation in my lifetime."
But though he has heard no complaints from consumers about a lack of choice for computers, software or credit, Mr. Metzenbaum praised the Clinton administration for "reinvigorating" antitrust enforcement.
"Consumer rights weren't dead, but they were dormant" during Republican administrations, he said.
Though Mr. Metzenbaum could not quantify the cost to consumers from Microsoft's domination of computer operating systems, he said, "the question is, would prices have come down even more if there had been more competition."
Officials of the Justice Department did not return repeated phone calls for comment.
Joel I. Klein, the assistant attorney general in charge of the antitrust division, has said the goal of the Microsoft case is to enable computer makers to decide what software they include in their computers, not Microsoft. That would benefit consumers by giving them more choices, he said.
"Some commentators have argued that it makes no sense for us to be challenging a practice like Microsoft's tying of its browser to its operating system when it gives away the browser for free," he said. "But if the no-cost product is one intended to protect or establish monopoly power, then the strategy is predatory and it violates the antitrust laws."
Mr. Klein claims that the Justice Department's vigilance in enforcing the antitrust laws has played a key role in keeping the American economy competitive and free of inflation. But given the tough competition in technology, he said, the department's interventions will be "modest" and "surgical."
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