Herbert Stein, a senior fellow at the American Enterprise Institute, was chairman of the Council of Economic Advisers under Presidents Nixon and Ford.
(Michael Lewis couldn’t take any more.)
Day 13 of the Trial
On Nov. 9, the 13th day in court in its suit against Microsoft, the Department of Justice marched down the field without much resistance. It gained lots of yards and made lots of first downs. Whether it scored enough points, or any points, remains to be seen. We are still, I would guess, in the first quarter. The DOJ had the ball almost all the time, and it made, in my opinion, effective use of its time of possession. Microsoft had the ball for only a few minutes, but–also in my opinion–it fumbled it.
The morning was devoted to the DOJ questioning an official of Apple, the afternoon to questioning an official of Intel. Basically, the purpose in both cases was the same. The DOJ wanted to show that Microsoft had used its monopoly power as a supplier or customer to force the other company to behave in a way that advantaged Microsoft and reduced the possibility of competition against it. The Apple and Intel officials were articulate, precise, well-informed, and consistent in supporting the position the DOJ expected of them. The DOJ lawyers were quiet, nonirritating, and well-organized. They had lots of documentation on their side.
In the Apple case, the claim was that Microsoft used the threat of not making a new version of its Office software usable for Apple if Apple did not agree to make Microsoft’s browser the default browser on Apple’s computers (meaning the browser that could be used without any further effort by the customer). In fact, a deal to that effect was made. The Microsoft team tried to argue that the deal was not forced upon Apple by Microsoft but rather was the byproduct of a mutually agreed upon settlement of a patent dispute.
To support its position, the Microsoft team showed a video of the president of Apple explaining the agreement to a conference of computer industry people and describing the agreement as evolving from the patent dispute. Unfortunately for Microsoft, the video also showed the audience of computer experts booing and jeering at this explanation, leaving me and others in the courtroom with the impression that well-informed people did not accept his–and Microsoft’s–explanation. I think the video presentation backfired against Microsoft.
This incident raises a puzzling question. The members of this unseen audience booing and jeering were not sworn witnesses in the case. Should the judge pay any attention to their reaction, and can he help doing so? A similar, and more important, question can be raised about Bill Gates’ video testimony, a little of which was also shown this morning. Gates surely seemed, through his manner of speech and body movements, not to have been entirely candid. Is the judge supposed to pay attention to this behavior or only to what was actually said? I don’t know.
I went to the courtroom today thinking that this kind of adversarial proceeding was a bad way to learn the truth about economic and technical matters that are so complex, and that testimony from objective experts would be more revealing. I came away with more respect for the adversarial process. It seems to me that the courtroom method is as likely to discover “the truth” as other processes I am familiar with, such as congressional hearings or academic panels. But also, I don’t think that anybody knows or will know the truth of these matters. We don’t know whether computer users and the general economy today are worse or better off because of Microsoft’s obviously rough market behavior. And 20 years from now we won’t know whether we are better or worse off because of the outcome of this case, whatever that may turn out to be. But the present procedure probably tips the scales a little in the direction of a good outcome.
My new appreciation of the adversarial process is undoubtedly due to the performance of Judge Jackson. I think he was very good at making sure that all the technological aspects of the case were made as clear as possible. Also he showed a subtle mind. At one point the witness was asked something about the number of new computer buyers. The question obviously puzzled the witness, as it did me. The judge then pointed out the difference between buyers of new computers and new buyers of computers. That won my great respect.
As the day wore on, I think I began to see Microsoft’s problem. Now it seems to be an irresistible giant. But it may feel itself vulnerable, as the dinosaur would have felt if it had had any sense. One can see in the combination of the Internet and Java the possibility of doing away with the desktop operating system, which would mean doing away with Windows. That may look like a threat against which Microsoft has to defend itself.
These companies, such as Microsoft, Intel, Apple, and America Online, are in a peculiar relationship with each other. That comes out clearly in the testimony. They are at the same time each other’s suppliers, customers, and competitors. One of these executives said that they all live in the same ecology, and they have to get along with each other. That is an interesting metaphor. The grass, the gazelle, and the lion all live in the same ecology. The gazelle eats the grass and the lion eats the gazelle. That is a way of getting along together. And, you can say that there will always be grass, gazelles, and lions. But individual gazelles may not be so happy with the balanced equilibrium of this ecosystem.
Tuesday, Microsoft will probably have the ball, and I may learn something very different from what I learned today.
