- The Washington Times - Wednesday, September 27, 2000

U.S. antitrust chief Joel Klein may be getting out of the business just in time. Although his adventure in software development may pay off for him when he officially leaves the job later this month, the adventure itself has just suffered two setbacks at the hands of federal judges. That's good news for consumers and the new "e-conomy."

On Tuesday, the U.S. Supreme Court ruled that the U.S. Circuit Court of Appeals for the District of Columbia would have to hear Mr. Klein's case for redesigning Microsoft, maker of the famed Windows computer operating system, rather than allowing the case to go straight to the high court itself. Having won a lower court ruling to break up the company for violating antitrust laws, Mr. Klein and his colleagues at the Justice Department had sought to skip the appeals court. For public consumption, they argued that a lengthy appeals process could irreparably harm "competition" and the high-tech economy, as though the department's antitrust enthusiasms wouldn't have the same effect.

But there were political considerations involved as well. The appeals court had already rejected a previous Justice Department attempt to regulate Microsoft, and it's not clear this case has any better chance. Moreover, the involvement of the appeals court essentially guarantees that the case will carry over into the next administration. A George W. Bush administration may not be as hostile to Microsoft as this one is.

The other setback to Mr. Klein came from the chief judge of the 7th U.S. Circuit Court of Appeals, Richard Posner. Mr. Posner served as mediator between Microsoft and the Justice Department and 18 states which had also filed suit against the company. In a speech last week he sharply criticized states' involvement in the case, saying that the state attorneys general did nothing more than take advantage of the federal case to get in on the financial spoils. But he also had harsh words for the feds.

"There is a serious mismatch between the conditions of the New Economy and the institutional structure of antitrust enforcement," he said. The Justice Department and its trust-busting friends at the Federal Trade Commission "do not have adequate technical resources and do not move fast enough to cope effectively," he said, with changing software, telecommunications and Internet industries. It is a measure of the government's agility that at the time of the high court's decision, legal experts were still arguing in Dickensian fashion over how many justices were necessary to vote to take the case or send it back to the appeals court.

None of this now matters to Mr. Klein. In the wake of the Microsoft case, there will be plenty of job openings for lawyers who can advise corporations on how to protect themselves from future Joe Kleins. But it matters very much to consumers, who will bear the consequences if future Microsofts divert their resources from product innovation to old-fashioned lobbying and court fights.

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