Jonathan Rauch is a senior writer for National Journal and a writer-in-residence at the Brookings Institution.
Day 38 of the Microsoft Trial
Today is spin day. The government is finishing with its last witness. Time to fire off some summary zingers. In front of the courthouse, a knot of federal and state officials are explaining to the press why Microsoft is toast. Joel Klein, the head of the Justice Department’s antitrust division, tells the TV cameras that the government has provided “mountains of evidence” that Microsoft has engaged in “predation, exclusion, and coercion.”
As it turns out, the spinning is a day early. Everyone thought the government would rest today, but that plan encountered a fatal exception. Now in his fifth day of testimony, Franklin M. Fisher, the MIT economist who serves as the government’s big-picture explainer, is still explaining. David Boies, the government’s ultragenteel lead lawyer, is lobbing softballs at him. Last Thursday, when Microsoft cross-examined Fisher, the idea was to elicit “I don’t know”s. Boies, the friendly attorney, is after “Oh, yes indeed!”s. Might Microsoft keep its prices for Windows low, yet still be a monopoly? Oh, yes indeed! Are there other things besides price gouging that a monopoly might be up to? Oh, yes indeed!
Curiously, the government is actually using this last witness today to rebut the testimony of Microsoft’s first witness: Richard L. Schmalensee. Microsoft has already released his written testimony and, although Fisher has not been allowed to see it, everyone knows what it says. Like Fisher, Schmalensee is an MIT economist. In fact, he was a student of Fisher’s. So the Looking Glass symmetry is perfect: Tweedledee is answering today the arguments that Tweedledum will make tomorrow.
Trying to arrest a headache, I let my attention wander from Fisher to Klein and back again. It occurs to me that Klein’s spin actually provides a useful way to think about the main elements of the case. Predation. Exclusion. Coercion.
First count: predation. The government says that Microsoft gave away its Internet Explorer browser and tied it into its Windows operating system to strangle Netscape, whose technology it feared. Fisher has hammered away at this point for days. But today the only surprising moment comes when Fisher makes a point for Microsoft. Boies asks Fisher if consumers have been hurt by Microsoft’s browser war, on balance. “On balance?” says Fisher. “That’s very hard to know. On balance I think the answer is no–up to this point.”
Actually, this is not so much a damaging admission as a ringing statement of the obvious, but it does focus attention on a singular aspect of the government’s case: The harms alleged are mainly, if not entirely, in the future. A few minutes after Fisher drops his bomblet, Tom Miller, the Iowa state attorney general, helpfully drives the point home. “If consumers lose money in the future, that’s just as important as losing it in the past,” he tells reporters. Oh. I’ve lost a lot of money in the future.
Second count: exclusion. By making a series of deals in which various online services and computer makers agree to feature Microsoft’s browser on their desktop, Microsoft used its muscle to exclude Netscape. So charges the government. But one of Microsoft’s big points is that this can’t possibly be “exclusion” in any ordinary sense of the word, because anyone who wants Netscape can get it–and run it–for free. Netscape (says Microsoft) still has a large share of the browser market and distributed 108 million copies of its browser in 1997 alone.
Again pre-empting, Boies elicits Fisher’s reply. Because Microsoft was determined to be the only browser that occupies the coveted “one-click” place of honor on every computer’s desktop, consumers must make a special effort to obtain, or at least to use, Netscape. They might have to download it or put it on the desktop themselves. “It’s just a lot harder for any other browser to be chosen,” says Fisher. Consumers’ choices, he says, “have been conditioned in certain ways.”
So Netscape’s browser has been “excluded,” not from availability but from the last degree of convenience. Similarly, perhaps, if your car comes with only one preset radio station, the other stations are “excluded”?
Third count: coercion. This is what those e-mails are all about: Microsoft’s strong-arm tactics in its all-out effort to make Internet Explorer the dominant browser. And here the facts speak compellingly for the government. But tough competition is “anti-competitive” only if you’re a monopoly using illegal tactics. And here the argument really does become Tweedledum and Tweedledee.
Dee: “You have a monopoly on operating systems, which you use to the advantage of your browser.”
Dum: “Nohow. We fear a new competitor may emerge at any moment, so we behave as though we were not a monopoly–cutting prices, innovating, competing ferociously.”
Dee: “Contrariwise! You force down prices to defend your monopoly.”
Dum: “Nohow! Monopolies raise prices, remember?”
Dee: “Contrariwise, you will raise them some day, and till then you’ll defend your monopoly.”
Dum: “If it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t. That’s logic.”
Tomorrow, after the government’s economist finishes and before Microsoft’s begins, Microsoft will make a motion to dismiss, which everyone (including Microsoft) expects the judge to ignore. Me, I’d probably grant it. Not because Microsoft isn’t powerful and ruthless–it is. Rather, because antitrust law is a bull in a china shop when it fails to distinguish, objectively and predictably, between supercompetitive behavior and anti-competitive behavior, or between benefits to consumers and (future) harm to consumers. It does not seem to me that the government has met that burden.
