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To: Daniel Schuh who wrote (15393)	12/22/1997 8:57:00 PM
From: Daniel Schuh	Read Replies (1) \| Respond to of 24154

Why Bill Gates should worry economist.com Oh no, Bill's favorite magazine weighs in. They, like the good gray NYT, do their best to present both sides. But, in the end... Et tu, Economist? All this means that Mr Gates's lawyers have a strong case to present. But antitrust policy is not, at bottom, merely about economics and law: it is also about politics and symbolism. The overwhelming impression from the pages of testimony gathered by the Justice Department in its pursuit of Microsoft is of a firm that still thinks of itself as a start-up, which therefore needs to fight for every inch of territory. If a customer betrays Microsoft by switching to another supplier, then (on this view) it is quite right for a company official to ring up the customer and call him "an enemy". Intel (motto: "only the paranoid survive") takes an attitude only slightly less aggressive. Yet, from an antitrust perspective, paranoia is looking increasingly perilous. A paranoid firm is more likely to violate antitrust law, which says plainly that dominant companies have to follow stricter standards than do small companies. "It's funny to talk about killing your competitors when you have only 5% of your market," Thomas Kerr, an antitrust professor at Carnegie Mellon University, points out. "When you have 80%, you are asking for trouble." Besides, antitrust policy has always been strongly influenced by politics. Just having economic logic on its side does not mean that Microsoft can safely become unpopular. Looking back, many people now think it was unfair to break up Standard Oil, a firm that brought down the price of kerosene from 30 cents a gallon in 1869 to just six cents in 1887. But Rockefeller was portrayed as a bully-and lost. Gary Reback, a Silicon-Valley lawyer at Wilson Sonsini Goodrich & Rosati who has masterminded attacks on Microsoft, understands what reputations are worth in business: "The greatest significance of what we are doing now is changing the perception of Microsoft in the business community," he says. As Microsoft expands, it has already frightened companies in the cable-television industry and banking. An even more sensitive issue, as it pushes further into what it calls "content", will be the media's attitude. At Mr Nader's conference, packed with journalists, the loudest applause came when Mr Reback read out two entries about Mr Gates in the same encyclopedia. The original print version, published by Funk & Wagnall in 1993, ends a fairly complimentary description of the software mogul with the aside that "he has been known as a tough competitor who seems to value winning in a competitive environment over money." The on-line version in Microsoft's Encarta encyclopedia is identical, except the final phrase has been changed to "he is known for his personal and corporate contributions to charity and educational institutions." Such heavy-handed mistakes by Microserfs could yet cost Mr Gates dear. Funny thing about that last paragraph, the same point is made in my favorite article, at www.around.com, link in my profile. I forgot that Encarta was basicly Funk and Wagnall's. Alas poor Britanica, brought low by Bill and what you used to buy a volume at a time at the grocery store! What an impressive content empire Bill is building! Just hope he doesn't win with Cnet, the ilk's got friends there. Cheers, Dan.