The Case Against the Case Against Microsoft

articles
Nov. 13 1997 3:30 AM

The Case Against the Case Against Microsoft

Why the Justice Department is barking up the wrong operating system.

(Note: Ralph Nader made the case against Microsoft in Slate two weeks ago. In the following article, hotlinks lead to more detailed discussion.)

Advertisement

It is no crime for a company to be successful. The are designed to complement, not displace, market forces. The laws do not prevent market winners from enjoying the fruits of their success or protect losers from the consequences of their failure.

What the antitrust laws do condemn is anti-competitive conduct--truly exclusionary or predatory acts--by firms that have ""--the power to raise prices or exclude competitors from the market. Microsoft's critics have never established that Microsoft and its conduct satisfy either element of the law.

I n most discussions of Microsoft, it is just assumed that the company has monopoly power. However, no court has ever reached that conclusion. Even though more than 80 percent of the personal computers in the world use Microsoft's operating system, it is far from clear that an antitrust court could be persuaded that personal computer operating systems constitute a separate market. After all, Microsoft's critics claim that browsers in the near future will (or perhaps already do).

Even assuming for the sake of argument that Microsoft does have monopoly power, the question still is whether truly anti-competitive behavior accounts for its success. We don't need to speculate about the answer, because government antitrust enforcers have spent the better part of seven years putting Microsoft's competitive behavior under a microscope.

A lmost seven years ago the Federal Trade Commission set out to determine whether Microsoft had monopolized personal computer operating systems. After one of the most extensive antitrust investigations in history (completed by the Justice Department when the FTC failed to issue a complaint), the government found only a single, rather picayune practice--the so-called "per processor" license--worthy of challenge. According to the government itself, that practice did not account for Microsoft's competitive success. Rather than suffer the cost and hassle of litigation, Microsoft agreed to a ending the practice.

For Microsoft, acceding to the consent decree was just the beginning. Bill Gates couldn't blow his nose without starting a new investigation. The Justice Department stopped Microsoft from acquiring Intuit, the maker of Quicken personal-finance software. It threatened to block Microsoft's introduction of Windows 95 because Microsoft included the.

51000_51228_neubecker_airplanespot

N ow comes the charge that Microsoft has by including its Internet browsing software, Internet Explorer, with Windows 95. Microsoft points to a that was negotiated by Microsoft for the specific purpose of allowing the company to include IE with Windows.

It is telling that the government chose not to attack the "bundling" of IE with Windows as an actual antitrust violation--merely as a violation of the consent decree. Whatever the technical merits of the government's interpretation of the decree, you have to wonder what important public interest will be served if the government's case succeeds. Microsoft makes the IE browser to consumers who buy new personal computers with Windows 95 installed. And more convenient, seamless access to the Internet from the desktop will. It is hard to see any anti-competitive danger that justifies denying people these benefits.

Microsoft's inclusion of IE with Windows does not prevent computer manufacturers from installing competing browsers or putting those browsers on the desktop. Indeed, the computer companies that wanted to take IE off their desktops (the behavior Justice wants to prevent Microsoft from forbidding) probably intended to give Netscape Navigator an exclusive position on the desktop. Microsoft did not demand that Netscape be removed, only that IE be there as well. This may be the first time that the government has gone against a company with a smaller share of sales in order to protect the ability of its dominant competitor to secure an exclusive.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Hasbro Is Cracking Down on Scrabble Players Who Turn Its Official Word List Into Popular Apps

The Ludicrous Claims You’ll Hear at This Company’s “Egg Freezing Parties”

  News & Politics
The World
Oct. 1 2014 11:48 AM Syria’s “Moderate” Rebels Are Realizing That U.S. Airstrikes Help Bashar al-Assad, Not Them
  Business
Buy a Small Business
Oct. 1 2014 11:43 AM “I Didn’t Want to Build the Next Twitter for Cats” Search funds are the quiet, dependable, risk-averse sibling to the startup. 
  Life
The Vault
Oct. 1 2014 10:49 AM James Meredith, Determined to Enroll at Ole Miss, Declares His Purpose in a 1961 Letter
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Oct. 1 2014 10:54 AM “I Need a Pair of Pants That Won’t Bore Me to Death” Troy Patterson talks about looking sharp, flat-top fades, and being Slate’s Gentleman Scholar.
  Arts
Brow Beat
Oct. 1 2014 10:44 AM Everyone’s Favorite Bob’s Burgers Character Gets a Remix You Can Dance to
  Technology
Future Tense
Oct. 1 2014 11:48 AM Watch a Crowd Go Wild When Steve Jobs Moves a Laptop in This 1999 Demonstration of WiFi
  Health & Science
Bad Astronomy
Oct. 1 2014 7:30 AM Say Hello to Our Quasi-Moon, 2014 OL339
  Sports
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.