Microsoft ruling's relevance doubted

Antitrust law a relic in Information Age, Gates' supporters say

April 05, 2000|By Mark Guidera | Mark Guidera,SUN STAFF

Is the 110-year-old federal law used to break the grip of railroad, bank and oil trusts in the early 1900s -- and now the main weapon against Microsoft Corp. -- an antiquated legal relic in a high-tech economy characterized by lightning-fast change?

If you believe Bill Gates, the one-time software whiz kid who created a corporate Goliath out of his parents' garage, the Sherman Antitrust Act is a dinosaur, out of sync with the rules of today's Internet-propelled economy that winnow losers in a fiercely competitive environment.

Gates and his army of Microsoft executives and lawyers argue that if Judge Thomas Penfield Jackson's ruling Monday that Microsoft violated antitrust law is allowed to stand, it will have a broad effect, stifling innovation and new businesses.

Backing their argument is Josh Mathis, executive director of Americans for Technology Leadership in Washington, who said antitrust laws are not in step with the fast-paced technological changes that mark the Information Age.

"This ruling sets a dangerous precedent that will lead to government bureaucrats designing software, and picking winners and losers in the marketplace. This should be a wake-up call to all those who care about America's leadership in technology," he said yesterday.

Changes in cyberspace are occurring so quickly that antitrust laws can't keep up, said John Robb, director of Internet consulting for Gomez Advisors Inc. in Lincoln, Mass. Some monopoly issues in the Microsoft case could be moot in a matter of months, he said.

"The antitrust issue is completely overblown," he said.

Antitrust experts, regardless of whether they agree with Jackson's ruling, said Gates and his supporters are wrong. The law used against such industrial giants as Standard Oil Co., Alcoa and AT&T is as relevant as when it was used to dismantle John D. Rockefeller's oil empire in 1911, they said.

In short, technology and its rapid-fire changes have not changed the central tenet of antitrust law: prevent an aggrandizement of economic power so strong that it is a stifling force.

"Technology in itself is not some sort of amulet that protects you from the general purpose of the Sherman Act. Antitrust law protects competition," Columbia University law Professor Eben Moglen said yesterday.

At the heart of the government's case is the argument that Microsoft used the dominance of its Windows operating system for personal computers to block PC makers from offering competing operating systems and Internet browsers. Jackson termed it an "oppressive thumb."

Glenn Manishin, a former Justice Department lawyer who helped oversee the breakup of AT&T in the 1980s, said the Sherman Act was written much like the Constitution: "There's not a lot of specific guidance. It's meant to allow for flexibility."

"It's just as courts have said. They are written in such a way as to be able to respond to changing circumstances as the markets evolve over time. Technology doesn't change that," said Manishin, an antitrust lawyer with Patton Boggs LLP in McLean, Va.

Manishin draws a parallel between Microsoft and the AT&T case, in which the telecommunications giant argued that consumers liked a universal service provider and that its dominance did not squelch innovation.

"What I like to remind people of is that before AT&T was broken up, its most significant innovation was the Princess phone," he said. "Innovation has flourished since Ma Bell was split up."

Lars H. Liebeler, a Washington antitrust lawyer who advises the Computing Technology Industry Association, agreed that today's technology-oriented economy hasn't altered the usefulness of the Sherman Act.

But he argued that in the AT&T case, government lawyers were able to quantify how consumers had been harmed by showing the company's long-distance rates. No such economic "injury" to consumers has been shown in the Microsoft case, he said.

Liebeler said the government's success with Microsoft, no matter what happens on appeal or in any settlement, foreshadows more antitrust actions. "Other technology companies with large market shares should be very worried about this ruling," he said.

Among them, he said, is Cisco Systems Inc., which dominates the market for computer networking equipment in much the way Microsoft dominates the market for PC operating systems and applications.

Sun staff writer Michael Stroh and wire services contributed to this article.

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