Busted economist.com
Meanwhile, Bill's former favorite magazine weighs in, and it's not a pretty picture.
. . . Judge Jackson's 207-page document, released on November 5th, should not really have been so surprising. The government?s case was as much about proving Microsoft's intent as about establishing its actions. Perhaps if the firm had, from the start, been franker about those intentions, and had shown some regret, a trial might have paved the way for a settlement. But its legal strategy, devised in outline by Bill Gates himself, was, characteristically, not to give so much as an inch. . . .
As an antitrust expert who is by no means hostile to the company puts it, the e-mails were devastating because they established that ?their intent was crystal-clear and their intent was pretty bad.? As well as undermining Microsoft's own people, the e-mails buttressed government witnesses, such as Jim Barksdale of Netscape and Steve Case of America Online, who might otherwise have been discounted as commercial rivals out to even the score. At some point in the trial, the judge concluded that he was being lied to. If his findings seem overwhelmingly to reflect the government's view, Mr Gates and his colleagues have only themselves to blame.
And, of course, it couldn't happen to a nicer company.
The judge's final paragraph is worth quoting in full:
Most harmful of all is the message that Microsoft's actions have conveyed to every enterprise with the potential to innovate in the computer industry. Through its conduct towards Netscape, IBM, Compaq, Intel and others, Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft?s core products. Microsoft's past success in hurting such companies and stifling innovation deters investment in technologies and businesses that exhibit the potential to threaten Microsoft. The ultimate result is that some business innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft's self-interest.
The tone and relentless logic of the judge?s findings are, says one antitrust economist, an enormously significant development. Despite Microsoft?s hopes, each part of his text has been written in such a way that his eventual findings in law, expected early next year, will be hard for any superior court to overturn. They also support the widest possible range of remedies, including breaking the company up.
Sceptics about the role of antitrust enforcement in the high-technology business may still argue that none of this matters, thanks to the ?paradigm shift? that is being brought about by the Internet. They may have a point?but the market is not changing nearly as fast as some enthusiasts believe. If Microsoft?s power is already in inexorable decline, why is it by far the most valuable company in the world? And why has its market value doubled during the 18 months which Judge Jackson has taken to brand Microsoft a monopoly?
Also from this week's issue, this editorial touching the remedial can of worms:
Now bust Microsoft?s trust economist.com
The Internet has indeed fostered the growth of server-based computing, which reduces the importance of the client (PC) operating system; as well as open-source software, such as Linux, that is nibbling at Windows?s hegemony. Yet, as Judge Jackson points out, ?the fact that these new paradigms exist in embryonic form does not prevent Microsoft from enjoying monopoly power today,? or, he maintains, for the foreseeable future. Microsoft?s huge profits (more than those of the world?s next 500 software firms combined) and its lofty share price hardly point to a firm about to be knocked off its pedestal by technological change. Rather, they suggest that Microsoft has exploited its monopoly to slow down innovation by rivals, thereby causing real economic damage.
So remedial action is called for. But Mr Klein?s second problem is that Microsoft has shown itself to be adept at circumventing past attempts to curb its excesses. To devise ?conduct remedies? to restrain a firm as clever and as aggressive as Microsoft, without the need for constant and intrusive policing, may be impossible. There is much to be said, for example, for preventing Microsoft from entering into the kind of exclusive contracts that curtailed Netscape?s access to its market, and for making its pricing policies public and non-discriminatory. Yet it is now insufficient for the Justice Department simply to have yet another go at modifying Microsoft's behaviour.
That points to structural remedies, which are anyway preferable as a matter of antitrust law. Ever since the Standard Oil case in 1911, the Supreme Court has held that conduct measures are inadequate when dealing with a durable and pervasive monopoly. But-and this is Mr Klein's third big problem?some break-up ideas could do more harm than good. For example, splitting Microsoft into competing, vertically integrated firms (the so-called Baby Bills solution) could result in a balkanisation of the software industry and an erosion of the standards and easy compatibility that consumers want.
Once again, a can of worms.
Cheers, Dan. |
