Mr. Gates, meet Mr. Antitrust

Mr. Gates, meet Mr. Antitrust: By Janelle Brown. Three former Justice Department antitrust experts handicap the new Microsoft suit.

By Janelle Brown

May 19, 1998 | There were more than 100 pages of legal documents filed today in the two antitrust suits against Microsoft. And that's not including the thousands of pages of commentary, PR spin and news analyses that have filtered through the media in recent months -- a mountain of conflicting information. Will the antitrust cases have dire consequences on technology innovation and consumer choice, as Microsoft alleges? Or are they a reasonable action necessary to preserve competition? Salon spoke with three experts in antitrust law who hold contrasting views on the ramifications of this case and how the lawsuits might play out. (We also offer The browser war goes thermonuclear, commentary by Scott Rosenberg, and Who owns the desktop? an analysis of interface issues by Andrew Leonard.)

Carl Shapiro teaches economics at the University of California at Berkeley. He served as deputy assistant attorney general for economics in the Justice Department's antitrust division from 1995 to 1996. Robert Litan preceded him in the same position and participated in the antitrust case against Microsoft that ended in a 1995 consent decree before moving to the Brookings Institute to become its director of economic studies. Luke Froeb teaches economics at the Owen Graduate School of Management at Vanderbilt University and was an economist at the Department of Justice's antitrust division from 1986-88 and 1990-93.

One of the key demands for "relief" in the Department of Justice suit is that Microsoft separate its Internet Explorer browser from the Windows operating system. Is that reasonable?

Froeb: The relief here is problematic because it puts the Department of Justice in the software-design business. They're asking for a much bigger relief than the 1995 consent decree -- they're asking Microsoft to give up control of their front page and asking Microsoft to redesign their software to include other add-ons. That poses a huge problem, because the government is presuming to know what's best for the evolution of software design.

Because innovation is the primary dimension of competition here, it presumes an awful lot that the government knows how best to compete in this industry. It's easy to say Microsoft has market power; it's difficult to know what to do about it. In this case, the solution raises more problems.

Litan: It's an uphill climb. I think that the easier case for Justice to make is that Microsoft offer a choice to PC manufacturers to bundle or unbundle the products. But asking Microsoft to put Netscape on their system may be something that stretches the envelope.

In Justice's defense, they're only asking that Microsoft offer a choice ... I think Microsoft will probably choose to give manufacturers the choice if they're forced to. [The manufacturers] would almost certainly not take the option of loading other browsers on their system.

Is the antitrust case breaking any new legal ground?

Shapiro: I would say that the Justice Department has very carefully crafted a case against Microsoft to avoid having to break new legal ground, and to give them the strongest position to limit Microsoft's conduct without taking unnecessary risks.

If you look at the conduct the Justice Department is complaining about, it falls in traditional categories of antitrust law that have been litigated for 50 to 100 years. We're looking at exclusionary contracts used by a monopolist, tying and bundling.

I suspect many people will take note of one of the remedies -- the "must carry" provision, forcing Microsoft to carry Netscape. What they're saying is that because Microsoft has engaged in anti-competitive conduct, this "must-carry" is needed as a remedial measure to make up for the damage to competition already created by Microsoft. That's an important legal distinction.If anti-competitive conduct is found, the court has much broader scope to force the company that's engaged in monopolization to modify their business behavior to undo some of the ill effects of prior conduct ...

Here, the view would be Microsoft has crossed the line, and this is a way to fix the problem.

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