Taking a byte out of Microsoft

Taking a byte out of Microsoft
Melanie Scarborough
The Washington Times
September 7, 1999

When Bill Clinton announced Janet Reno as his choice for attorney general, she spoke briefly of her agenda for the Justice Department. "I want to do what I can to make the law make sense to citizens and businesses alike," Miss Reno said. "I want the laws to assist them in worthwhile endeavors, not to stand as bureaucratic obstacles." If that is the yardstick of her success, she has failed spectacularly. For it makes no sense that she didn't apply adequate law to prevent Chinese espionage but has marshaled the resources of the federal government to try to thwart Microsoft.
Both sides in the case have filed proposed findings of fact; the judge will issue his next month. But this much is clear: There is little doubt that what really galls the feds is not so much the company's practices as its audacious profits. In the cant of the Clintonites, justice is measured not by equal opportunity, but equal outcomes. If Fiddle is wealthy and Faddle is not, then Fiddle is being unfair. Assign government lawyers to make that claim and it is better dressed - but no less specious.

The Justice Department cloaks its crusade in anti-trust litigation. The feds claim by including the Internet Explorer in its popular Windows software, Microsoft unlawfully (1) bundled two separate products, (2) foreclosed Netscape from avenues of distribution, and (3) created a de facto monopoly for itself that (4) somehow harms consumers.

"Forcing PC manufacturers to take a Microsoft product as a condition of buying a monopoly product like Windows is plain wrong," says Miss Reno. But following that logic, the publisher of your local newspaper also is a fugitive from justice. He bundles news stories with TV listings and sells them as one product, doesn't he? And think of those victimized gentlemen who swear they buy Playboy only for the articles. Shouldn't they be free to purchase the prose without the unwanted pictures? Cable-TV subscribers buy a package of channels. (Want Lifetime? Here's Nick at Nite.) Alas, when Americans reelected Bill Clinton, Janet Reno was part of the deal.

It is instructive to remember Netscape didn't complain about Internet Explorer versions 1.0 and 2.0. Consumers considered the product inferior; Netscape wasn't threatened. It cried "foul" only after Microsoft drew customers with improved versions 3.0 and 4.0. At trial, the government had to prove Microsoft foreclosed Netscape from at least 40 percent of distribution routes. It evidently was unable to demonstrate Netscape was shut out from a single one.

As for the dearth of competition: Windows may be the operating system for 90 percent of computers using the Intel chip, but Microsoft hardly is running roughshod over the industry as a whole. On the Fortune 500 list, it ranks below Hewlett-Packard, IBM, Compaq and Dell. Moreover, were Microsoft a monopoly, it hardly would have invested $2 billion in research and development this year- nor would it feet compelled to hold down and even lower its prices. Yet in 1990 dollars, Excel has dropped 29 percent, Excel Upgrade is down 77 percent, Word Upgrade is down 73 percent, and Windows Upgrade is down 46 percent. The only items that have risen in price are Word (up 7 percent) and Windows (up 10 percent). If that is the mark of a predatory practice, then the line forms here to become prey.

And if Microsoft actually is crushing competitors, then what accounts for those companies' rising stock? Since the federal government took Microsoft to court, Amazon.com is up 838 percent, AOL up 555 percent; Yahoo has risen 455 percent; IBM, 91 percent.

The government's most absurd contention is that consumers somehow have been harmed. Software prices and computers have dropped dramatically in the past decade. Powerful technology is available and affordable, thanks in large part to Microsoft. Indeed, if the government wins this case, it will be the only winner. Penalizing Microsoft with restrictive regulation would discourage innovation. Compelling it to strip the browser from its package would give future customers less for their money. Nor is it even certain Microsoft's competitors would benefit from its loss - Microsoft has many satisfied customers who are not likely to jump ship.

Characteristically, the Clinton administration has turned antitrust legislation on its head. Unregulated monopolies were outlawed because they have no incentive to respond to the market. Yet the Justice Department now is operating under this tortured tautology:

Because Microsoft developed a product consumers prefer, the company must be penalized - perhaps by requiring it to offer a diminished product ... in order to protect consumers.

If the government prevails, everyone will suffer: Information technology drives the world's economy. This nation's prosperity is directly related to electronic productivity; between 1995 and 1998, it accounted for more than one-third of economic growth. Taxing Microsoft through litigation is a trickle-down tax on us all.

For Janet Reno, that may be the point. Bobby Kennedy set his sight on organized crime. Ed Meese went after pornographers. To this attorney general, Public Enemy No. 1 is the richest man an Earth. But Microsoft Chairman Bill Gates is a metaphor; capitalism is under siege. It is the Clinton administration, not Microsoft, that defines anti-competitive.

The message is clear: Dare to build a better mousetrap, and the feds will beat a path to your door.

**Taking a byte out of Microsoft**
**Melanie Scarborough**
The Washington Times
September 7, 1999
When Bill Clinton announced Janet Reno as his choice for attorney general, she spoke briefly of her agenda for the Justice Department. "I want to do what I can to make the law make sense to citizens and businesses alike," Miss Reno said. "I want the laws to assist them in worthwhile endeavors, not to stand as bureaucratic obstacles." If that is the yardstick of her success, she has failed spectacularly. For it makes no sense that she didn't apply adequate law to prevent Chinese espionage but has marshaled the resources of the federal government to try to thwart Microsoft. Both sides in the case have filed proposed findings of fact; the judge will issue his next month. But this much is clear: There is little doubt that what really galls the feds is not so much the company's practices as its audacious profits. In the cant of the Clintonites, justice is measured not by equal opportunity, but equal outcomes. If Fiddle is wealthy and Faddle is not, then Fiddle is being unfair. Assign government lawyers to make that claim and it is better dressed - but no less specious. The Justice Department cloaks its crusade in anti-trust litigation. The feds claim by including the Internet Explorer in its popular Windows software, Microsoft unlawfully (1) bundled two separate products, (2) foreclosed Netscape from avenues of distribution, and (3) created a de facto monopoly for itself that (4) somehow harms consumers. "Forcing PC manufacturers to take a Microsoft product as a condition of buying a monopoly product like Windows is plain wrong," says Miss Reno. But following that logic, the publisher of your local newspaper also is a fugitive from justice. He bundles news stories with TV listings and sells them as one product, doesn't he? And think of those victimized gentlemen who swear they buy Playboy only for the articles. Shouldn't they be free to purchase the prose without the unwanted pictures? Cable-TV subscribers buy a package of channels. (Want Lifetime? Here's Nick at Nite.) Alas, when Americans reelected Bill Clinton, Janet Reno was part of the deal. It is instructive to remember Netscape didn't complain about Internet Explorer versions 1.0 and 2.0. Consumers considered the product inferior; Netscape wasn't threatened. It cried "foul" only after Microsoft drew customers with improved versions 3.0 and 4.0. At trial, the government had to prove Microsoft foreclosed Netscape from at least 40 percent of distribution routes. It evidently was unable to demonstrate Netscape was shut out from a single one. As for the dearth of competition: Windows may be the operating system for 90 percent of computers using the Intel chip, but Microsoft hardly is running roughshod over the industry as a whole. On the Fortune 500 list, it ranks below Hewlett-Packard, IBM, Compaq and Dell. Moreover, were Microsoft a monopoly, it hardly would have invested $2 billion in research and development this year- nor would it feet compelled to hold down and even lower its prices. Yet in 1990 dollars, Excel has dropped 29 percent, Excel Upgrade is down 77 percent, Word Upgrade is down 73 percent, and Windows Upgrade is down 46 percent. The only items that have risen in price are Word (up 7 percent) and Windows (up 10 percent). If that is the mark of a predatory practice, then the line forms here to become prey. And if Microsoft actually is crushing competitors, then what accounts for those companies' rising stock? Since the federal government took Microsoft to court, Amazon.com is up 838 percent, AOL up 555 percent; Yahoo has risen 455 percent; IBM, 91 percent. The government's most absurd contention is that consumers somehow have been harmed. Software prices and computers have dropped dramatically in the past decade. Powerful technology is available and affordable, thanks in large part to Microsoft. Indeed, if the government wins this case, it will be the only winner. Penalizing Microsoft with restrictive regulation would discourage innovation. Compelling it to strip the browser from its package would give future customers less for their money. Nor is it even certain Microsoft's competitors would benefit from its loss - Microsoft has many satisfied customers who are not likely to jump ship. Characteristically, the Clinton administration has turned antitrust legislation on its head. Unregulated monopolies were outlawed because they have no incentive to respond to the market. Yet the Justice Department now is operating under this tortured tautology: Because Microsoft developed a product consumers prefer, the company must be penalized - perhaps by requiring it to offer a diminished product ... in order to protect consumers. If the government prevails, everyone will suffer: Information technology drives the world's economy. This nation's prosperity is directly related to electronic productivity; between 1995 and 1998, it accounted for more than one-third of economic growth. Taxing Microsoft through litigation is a trickle-down tax on us all. For Janet Reno, that may be the point. Bobby Kennedy set his sight on organized crime. Ed Meese went after pornographers. To this attorney general, Public Enemy No. 1 is the richest man an Earth. But Microsoft Chairman Bill Gates is a metaphor; capitalism is under siege. It is the Clinton administration, not Microsoft, that defines anti-competitive. The message is clear: Dare to build a better mousetrap, and the feds will beat a path to your door.