Microsoft: Antitrust Battles
in 1989 the FTC Bureau of Competition lawyer Norris Washington read the joint announcement at Comdex of a closer collaboration between IBM and Microsoft. The intended roles of OS/2 and Windows were defined in a way that sounded to Washington like collusion to control the market.
Microsoft received a letter from the FTC in June advising it of the investigation, but the FTC realized that although there had been collusion between IBM and Microsoft, events had overtaken the investigation because the IBM/Microsoft relationship had become acrimonious, with Microsoft pushing Windows and denigrating OS/2. But the FTC had begun to receive evidence of other business practices by Microsoft that required new attention.
Microsoft was told in April 1991 that the FTC had decided to expand the scope of its investigation to examine third-party allegations that Microsoft “has monopolized or has attempted to monopolies the market for operating systems, operating environments, and computer software and computer peripherals for personal computers.
In the end of January 1992, Digital Research – acquired by Novell in 1991, and whose DR-DOS was a major victim of Microsoft’s marketing practices – made a formal complaint to the FTC. Other software developers began to cooperate more with the FTC
In January 1993 the FTC a commissioner received the report but, was much acrimony between the commissioners. The FTC was not expected to do anything that would be harmful to the US software industry, and FTC stuff were told by the commissioners to consider only a narrow case
The industry was incensed that Microsoft had got off so lightly, and a protest developed into a legal challenge during the Tunney Act proceedings, conducted by Judge Sporkin, into whether the settlement was in the public interest. He concluded it wasn’t, but Microsoft won in the Court of Appeals when in a bizarre situation, Microsoft and the Do J were on the same side arguing for the consent decree. Judge Jackson was appointed to sign the consent decree, which he did in August 1995. When Microsoft “integrated” IE into Windows, the DoJ claimed it broke the integrated product clause of the consent decree, and started a contempt of court action in October 1997, only to lose it when Microsoft appealed, because of faulty wording in the consent decree. The result was that a new case was started in May 1998 which continues to this day, and may well run for a few more years.
Antitrust law is a hammer, not a scalpel. It is a blunt instrument that can have a powerful impact but only against something very much like anail—it cannot be used effectively against small imperfections, to nip and tuck so that the economy can be shaped just so, That lesson is evident to all who have been on the receiving end of antitrust enforcement and to all who seriously contemplate that prospect. however, evident to many who write about this field.
A recent article by Professor Steven Salop and Craig Romaine illustrates both the attractions of and the problems associated with the nip-and-tuck school of antitrust analysis. and Professor Salop and Dr. Romaine use the Microsoft litigation as their focus for discussion of antitrust law, or perhaps their piece stands the other way around. reports the allegations of behavior by Microsoft that plaintiffs in litigation with Microsoft assert constitute violations of the antitrust law. And argue that each allegation could constitute evidence of a design by Microsoft to reduce competition and preserve or extend a monopoly
they assume Microsoft possesses, argue as well that the right legal standard to apply is one that draws conclusions about corporate purpose largely from the effects specific behavior has or could have and consciously frames this standard so that the benefit of the doubt goes to plaintiffs.
We believe that this argue are misguided. Though purporting to offer a middle ground, they would dramatically expand the reach of antitrust law and would provide enormous discretion to decision makers who, following their arguments, could characterize an extraordinary array of ordinary business activity as violating antitrust strictures.
The basic charter of U.S. antitrust law is the Sherman Act of 1890.8 While not a model of clarity in all respects, the act makes three things plain. The first is that its provisions are intended to reach extreme, not ordinary, conduct—which is why conduct that violates the act’s major provisions constitutes felonies.