Microsoft Must Obey the Law
The court action recently brought by the antitrust division of the Department of Justice against Microsoft has triggered a great deal of thought and debate about the future of the Internet, electronic commerce and the role of government in both.
Even as a member of a generation that grew up listening to the radio, I find myself captivated by this controversy.
Like most Republicans, I am someone whose instincts lead me away from government regulation and toward the magic of the marketplace. In fact, it has been suggested that I am pro-Microsoft because in 1995 I questioned the Justice Department’s actions regarding the Microsoft Network. I thought it unfair that the Justice Department subpoenaed proprietary information from the company concerning “all strategic plans prepared by or for Microsoft . . . and any documents provided [to Microsoft] concerning predictions as to the future of computers and computer technology.”
I still question the breadth of that government request. But as I review what is at stake today--nearly total domination of one of the primary means of commerce for the coming century--I can only come to the conclusion that no one company should be allowed to dominate the Internet.
Microsoft should not be hindered unnecessarily in legitimate competition by government overregulation, but it cannot be allowed to use its current dominance in personal computer operating system software to preclude competition. The speed with which Internet and electronic commerce markets develop creates an increased responsibility for antitrust enforcement officials to move rapidly to prevent anti-competitive practices. While I have always opposed unwarranted government intervention in the marketplace, I think the Justice Department is doing the right thing by taking swift action to force Microsoft to comply with the law.
During a discussion on the future of commerce and technology in the 1996 campaign, a reporter asked me whether Microsoft was too powerful. I answered that the Internet could and would improve the lives of Americans, and that government should do whatever is necessary to ensure that we have vigorous competition in this area, adding that “the sophistication and speed of our [antitrust] enforcement must match that of the technology.”
Let me elaborate. Microsoft realizes that its PC operating system monopoly is threatened by the innovation allowed by the Internet. Innovation--the development of new technology--is, perhaps, the greatest contributor to enhancing productivity and improving our standard of living. It has been amply demonstrated that small high-tech firms contribute a disproportionately large share of employment, sales, export growth and innovation. There cannot be innovation without competition, and there will not be competition if potential competitors are blocked at every turn.
Microsoft’s goal appears to be to extend the monopoly it has enjoyed in the PC operating system marketplace to the Internet as a whole and to control the direction of innovation. This goal was most clearly laid out in an internal Microsoft memo detailed in the Wall Street Journal earlier this year:
“Nathan Myrhvold, Microsoft’s chief technology officer, confirms that Microsoft hopes to get a ‘vig,’ or vigorish, on every transaction over the Internet that uses Microsoft’s technology, though he says in some cases Microsoft’s share could come from a one-time software licensing fee. (Vigorish is a slang term used by bookmakers that means, roughly, the profit made for bringing two bettors together.)”
You don’t need to be Bill Gates (whom, incidentally, I’ve met and like) to see the profits that can be made by gaining monopoly control of the next major means of commerce. It is fairly easy, for example, to envision the entire securities industry moving to the Internet--initiating millions of online transactions worth billions of dollars each year. If almost everyone must pass through a Microsoft toll booth to use the Internet, it is not unreasonable to believe that Microsoft will impose its “vig” on most activity on the Internet.
No one--not Microsoft, another company or the government--should be allowed to deprive Americans of real choices in how they spend their money. This is particularly true of the Internet, which is rapidly becoming one of the world’s most significant sources of information and has the potential to become a major means by which commerce is conducted.
This case, despite the company’s protests, is not about one man, Gates, or one company, Microsoft. It is about a fundamental principle of our economic system: open and free competition. When a dominant company artificially dictates how, where and even if consumers have choice in the online marketplace, it is time for the government to step in and enforce the antitrust laws.
