Wednesday, February 18, 2004

Microsoft’s compliance with court orders and antitrust law is mirroring its feckless approach to software security. Time and again, the company has flouted the remarkably weak antitrust settlement it reached with the Justice Department. Then, only after a Microsoft abuse becomes painfully embarrassing, the company seeks to “patch” its problem.

It seemed obvious to industry observers from the very start that the much-criticized settlement contained so many loopholes that Microsoft could continue to avoid competing in the marketplace on the merits. Even the cynics assumed Microsoft would comply with its court-mandated obligations, since the settlement conveniently required no significant changes in its conduct. But the cynics were too trusting. Ironically, Microsoft has managed to commit multiple violations of a very bad deal. Call it adding insult to injury.

The Justice Department now acknowledges that a provision requiring Microsoft to license certain parts of computer code to rivals is not spurring “the emergence in the marketplace of broad competition to the Windows Desktop.” Judge Colleen Kollar-Kotelly agrees, yet maintains that the settlement is otherwise generally working.

The stark reality is that the settlement has been market-tested for two years, but the market that Microsoft unlawfully monopolized has not been pried open one iota. Microsoft’s stranglehold over the market for personal computer operating systems, as well as all collateral markets from which competition could theoretically emerge, has in fact increased since the ink dried on the settlement. Try as one may, it is impossible to identify a single competitor who has gained even 1 percent of the market share from Microsoft as a result of this decree.

While competition profoundly suffers, there has unfolded a pattern of choreographedMicrosoft concessions as to collateral issues. The stratagem works this way: An anticompetitive practice is detected by the Justice Department watchdogs. Microsoft vigorously protests that it has done no wrong, then, after much hand-wringing, eventually announces that it has seen the error of its ways and modifies the offending practice. This M.O. has been abundantly evident in various manifestations. For example, Microsoft’s Windows XP was configured in a way that whenever a user activated the “shop for music online” feature, Microsoft’s Internet Explorer Web browser was opened — even if the user had specifically set the computer to use another company’s browser. After stoutly denying the illegality of its stubborn practiceofrunning roughshodoverusers’ browser choices, Microsoft finally agreed to untie the link to Internet Explorer. But “patching” an egregious violation of basic antitrust law hardly calls for a round of applause.

Microsoft today retains its most potent anticompetitive weapon — commingling software with Windows to gain a nearly insurmountable competitive advantage — though that practice has been judicially condemned as illegal in the very same case. A decree that doesn’t stop a monopolist from repeating its illegal conduct manifestly harms competition both now and over the long run.

Meanwhile, Microsoft continues to say one thing about competition while doing another. In promoting its Net Neutrality principles, Microsoft has said that consumers should be free to access all lawful Internet content and use the applications and devices of their choice. The company went so far as to call for government regulation of new industries because they might impinge on consumer choice. Meanwhile, this new-found advocate of consumer choice — the same Microsoft found by eight federal judges to have violated these principles — proceeds undeterred altogether by the antitrust laws.

The unanimous D.C. Circuit Court of Appeals got it exactly right in 2001, when it established the accepted parameters of behavior by a monopolist. This time, the court can establish remedy guidelines that ensure that consumer choice and competition can become real. Happily, a meaningful resolution of this landmark case would usurp calls for direct governmentregulation, which inevitably arise when antitrust enforcement fails.

Microsoft would have us believe it is now kinder and gentler. Its would-be cuddly corporate personality suggests that its unlawful business practices were last decade’s concerns. Not true. Patching up a few outlandish practices will neither restore competition nor improve computer security. And no one should doubt that consumer demand for greater security would be answered if competition were to replace a monopoly. That’s the nature of a competitive marketplace — enhanced consumer choice and genuine consumer welfare. And that is what continues to be missing.

What’s needed is honest but vigorous enforcement of laws that serve to keep markets free and vibrant, and judges bravely willing to stand up for the rule of law.

Kenneth W. Starr is former Solicitor General of the United States and a former federal court of appeals judge. He has represented software companies that have a direct interest in the Microsoft antitrust case.

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