March 25,
19956, Wednesday, NASSAU EDITION; VIEWPOINTS; Page A35
By Al Gordon. Al Gordon is a Viewpoints editor.
THE U.S. JUSTICE Department's antitrust case against the Microsoft Corp. raises major policy questions about the wisdom of trust-busting in the modern economy. But there is also a political dimension for the Clinton administration: Can you invite Bill Gates, Microsoft's chairman, over to socialize and try to break up his company at the same time?
Some "New Democrat" economists have argued that traditional antitrust policy, based on U.S. markets, no longer makes sense in a global economy with worldwide competition. But it's also true that New Democrats, like Bill Clinton, have come increasingly from Ivy League, professional backgrounds and tend to identify with corporate executives, who may have similar backgrounds. Democrats also have looked to corporate America, including the high-tech community, as a major source of campaign contributions.
Once conveying a clear image as the party of "the people," the Democrats are transforming themselves into the party of "who knows?" The president has invited Gates and other corporate executives to White House functions, both social and governmental, even as his Justice Department has vowed to revive aggressive antitrust enforcement after a dozen years of Republican laissez-faire.
The Microsoft case was touted by the Justice Department's antitrust division as a showpiece of its new aggressiveness. After all the sound and fury, however, the end result was a negotiated settlement requiring Microsoft to make some modest changes in its business practices. Computer industry analysts say the measures amount to little more than a slap on the wrist.
U.S. District Court Judge Stanley Sporkin rejected the agreement last month, charging that it failed to address key questions about whether Microsoft was trying to illegally monopolize the personal computer software market. The government and Microsoft contend the judge has exceeded his legal authority, and many legal experts think that Sporkin will be overruled by higher courts. But the judge's criticisms didn't exactly boost the administration's image.
There is general agreement among computer and software experts that Microsoft is an aggressive, if not predatory, competitor in the marketplace. But there is no consensus as to whether the Seattle-area-based software company is doing anything improper or illegal. There are, in fact, almost equally compelling arguments for breaking up Microsoft or leaving it alone - but not for taking Clinton's half-hearted approach.
PC Magazine estimates that 80 percent of the world's personal computers are compatible with Microsoft's MS-DOS and Windows operating systems - the basic set of operating instructions for a personal computer. Critics charge the company uses this domination to crush competition for its other software. The company denies the accusations.
The only way to spur competition, critics say, is to break up Microsoft, separating the operating systems effort from its other product lines, as happened with the breakup of the Bell telephone system.
The man who negotiated that breakup, William Baxter, former Justice Department antitrust chief, now a professor at Stanford University, is opposed to doing the same to Microsoft. Baxter says one of the characteristics of high-tech markets is a tendency to settle on a single dominant technical standard. DOS/Windows has prevailed in operating systems the way that VHS won out for VCRs. But the current bright idea dominates only until the next one arrives.
Prices for computer software and hardware are falling, but that could change if Microsoft continues to crush its competition. Microsoft or any high-tech giant holds most of the cards in antitrust bargaining because, given the relative pace of technological change as compared with legal proceedings, lawsuits almost certainly would become moot before they could ever get to trial. This can be a rationale for foregoing antitrust actions, but it is also an argument for modernizing antitrust law.
Ultimately, in a case like this, the government needs to have the courage of its convictions. Of course, that requires that you actually have convictions. Free-marketeer Baxter, who was much criticized by liberals, did. He dropped antitrust actions against IBM, arguing that the marketplace, not the government, should decide the corporation's fate, and backed the Bell breakup to metamorphose AT&T from a regulated monopoly to a competitive enterprise in a deregulated telecommunications industry.
Given its promise of tougher antitrust enforcement, the Clinton administration should have gone forward with tougher action against Microsoft. Instead, it attempted to court Bill Gates and to regulate him, too. They may call this innovative "New Democrat" thinking, but to most Americans it's just ideological mush.
Copyright 1995, Newsday Inc.