BRIT HUME and T.R. REID
After months of litigation, the trial of the government's antitrust case against Microsoft Corp. is in a recess, with both sides having put on their cases and most observers saying that the government is well ahead on points.
Among other things, Microsoft's presentation was marred by technical problems with its videotape exhibits, which led to sharp criticism from U.S. District Judge Thomas Penfield Jackson, who seemed to suspect bad faith on the part of the software giant.
The betting now is that the government will win the case at trial, setting the stage for an appellate process that could go on for years. No one should expect the government to have an easy road on appeal, or even in the remedy phase of the trial. That's because the Court of Appeals has already indicated it won't go along with at least one of the government's notions of what Microsoft should be required to do.
Prior to this case, the government asked the court to order Microsoft to sever its Internet Explorer Web browser software from its Windows 95 operating system. That action was brought under the terms of a consent agreement Microsoft had entered into previously. Judge Jackson, who also presided in that matter, agreed with the government, but the Court of Appeals reversed him, declaring that it should not be up to the government to decide how software companies design their products.
That decision forced the government to alter its strategy in this case. So the government came to court arguing, among other things, that Microsoft should be required to include not only its Web browser software but that of its competitor Netscape as well.
Never mind that there are other browsers out there trying to gain market share; the government asked only that this one product be given the benefit of the court's action.
This requested remedy underscores one of the chief problems with the government's case. No matter how masterfully presented, and there is widespread agreement that the government's special counsel David Boies has done an excellent job, there are questions about what the government is trying to accomplish in this case, and on whose behalf.
Antitrust law is intended principally to protect consumers, not rival players in a commercial competition. From the outset, the positions the Justice Department has taken in this case have suggested it is bringing the suit not so much to protect aggrieved or disadvantaged consumers, but to protect Netscape against the allegedly monopolistic practices of Microsoft.
David Boies and his team may have done a good job in establishing that Microsoft is a big, rich, ruthless company that gives its competitors no quarter. But being big, rich and ruthless is not against the law. What is against the law is the use of monopoly power to the detriment of customers. Here, the government has a problem. By various measures, the government has argued that Microsoft has raised the price of its Windows operating system and thereby hurt consumers.
But part of the government's case depends on the fact that Microsoft is giving away free its Internet Explorer software with its Windows operating system. The government argues the two are separate products; Microsoft contends they are inextricably linked. Either way, the consumer hardly loses. He (or she) is either getting an enhanced single product at virtually the same price as before; or he is getting two products for the price of one. So where's the damage?
Well, says the government, if Microsoft succeeds in wiping out its competitor with such pricing (the government seems to care only about one competitor: Netscape), then there will be less competition, less incentive for innovation and the consumer will lose in the long run. That's a reasonable argument, but it's theoretical, not actual, and the courts have been reluctant to support claims based on theoretical damage.
What's more, both the technology and the industry are changing so fast it's difficult for any rules imposed today to remain relevant tomorrow. After all, when Windows 95 first came out, the government was urged by America Online and other online services to prevent Microsoft from including its Microsoft Network service with the new software. AOL and others argued that Microsoft would use its alleged Windows monopoly to gain unfair advantage.
But it never happened. The Microsoft Network failed as a competitor to AOL, and has since been revamped into a World Wide Web "portal." It failed because the action in the online world was moving to the Internet, a change that transformed the competitive atmosphere to the point that earlier products, advantages and complaints were no longer relevant.
Similarly, Netscape, a stand-alone company when this case was filed, has now been acquired by America Online, changing the playing field dramatically, and raising the question of who is the dominant player now.
T.R. Reid is London bureau chief of the Washington Post. Brit Hume is managing editor of Fox News in Washington. You can reach them in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200, or you can e-mail T.R. Reid at firstname.lastname@example.org and Brit Hume at email@example.com.
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