- The Washington Times - Friday, June 9, 2000

Thanks for your help, Bill Gates, but federal district Judge Thomas Penfield Jackson will take it from here. In announcing essentially a hostile takeover of Microsoft Wednesday, Judge Jackson said he would reorganize it into two competing firms, the better to bring Microsoft into compliance with his interpretation of the nation's antitrust laws. Further, the plan calls for his retaining control of Microsoft for up to 10 years, which would allow him to modify the breakup, as he put it, "to accommodate conditions changed with the passage of time." Consumers and company shareholders may not appreciate the idea of giving a federal judge the last word on Microsoft's plans in a complex, fast-changing industry, but it's no longer their choice.

Microsoft's "crime" in this case, the Justice Department charged and the judge agreed, was to leverage its dominance of operating systems into control of the browser market. Operating systems are the virtual platform from which consumers launch applications like word processing and financial spread sheets, and browsers enable users to get access to the Internet. Because browsers offered a competing platform from which to open applications, the department argued, the company set out to monopolize that market to the great detriment of consumers. Put another way, "it used illegal tactics to prevent [browser rival] Netscape from freely selling its browser," the New York Times editorialized.

One would assume from such language that Microsoft must have held Netscape salesmen at gunpoint. In fact, what Microsoft did was to give away its own browser for free. Nothing stopped Netscape from continuing to sell its browser other than the fact that competition from Microsoft had driven the price of browsers to zero. If only Mr. Gates and Microsoft had tried to gouge consumers rather than to give them something for free, that would have been fine with the feds.

Still another crime the company committed, and which helped spur the judge to remedy the first crime by breaking Microsoft in two, apparently had to do with Microsoft's attempt to defend itself in court. Microsoft officials have been quoted publicly publicly complained Judge Jackson, "to the effect that the company 'has done nothing wrong,' and that it will be vindicated on appeal. The Court is well aware that there is a substantial body of public opinion, some of rational, that holds to the same view." It's generous of the judge to acknowledge that one can disagree with him and still be considered rational. But if one assumes Microsoft still has the right to appeal, why should the judge condemn the company for saying it intends to avail itself of that right? Why should Microsoft officials change their business practices if higher courts may yet uphold them, as they have in the past?

It's not just higher courts that Judge Jackson has to fear, however. It's the pace of technological change. Microsoft dominates personal computers, but new hand-held and other devices, which the company does not dominate, are serious threats to Microsoft's markets. Such competition ultimately may make the fight over Netscape's browser moot. Judge Jackson himself acknowledged the possibility in an interview with the Wall Street Journal when he noted that the Justice Department's past antitrust fight with IBM dragged on so long that the "market moved on" and made the case virtually irrelevant.

Markets can be that way. Given his new role in company management, Judge Jackson may find that out the hard way. One hopes consumers and shareholders survive the experience.

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