A Way Out for Microsoft
Bush administration officials are now debating how they will handle the antitrust lawsuit that the Clinton administration and 19 state attorneys general brought against Microsoft three years ago. Back in December, the answer seemed simple. Bush aides were suggesting that the government would drop its case against Microsoft if an appeals court overturned U.S. District Judge Thomas Penfield Jackson’s dramatic order last year to cleave the software giant in two. However, with oral arguments in the federal Circuit Court of Appeals in the District of Columbia now only two weeks away, that option is looking increasingly difficult for Bush.
The D.C. circuit court, a mostly conservative, pro-business court that overturned another anti-Microsoft ruling by Jackson in 1998, is expected to have some sympathy for Microsoft. The company’s case was no doubt aided by Jackson’s recent comments to reporters, including this: “My experience is that when the government charges someone, they are probably guilty.” But the 19 state attorneys general who are co-plaintiffs in the lawsuit say they will appeal to the Supreme Court even if Microsoft manages to persuade the circuit court to throw out the federal case. The appeals could stretch on for years, leaving a cloud of uncertainty over one of the strongest engines of U.S. economic growth.
At a campaign appearance last year in Microsoft’s home state of Washington, President Bush expressed sensible doubts about efforts to break up the company, portraying them as intrusive and potentially ineffective, putting government bureaucrats in charge of free-market forces and technological development they do not understand. “I stand on the side of innovation, not litigation,” Bush said.
The only way Bush can encourage innovation without litigation is to aggressively press for an out-of-court settlement that forces Microsoft to change practices that inhibit competition. Its operating system has hobbled competing software like Netscape’s Navigator Web browser and Sun Microsystem’s Java programming language. Microsoft’s anti-competitive behavior against Netscape and Sun motivated the government’s original lawsuit three years ago, and since then the company has engaged in similar anti-competitive behavior in the growing computer server market.
An out-of-court settlement should compel Microsoft to make its now-secret “source codes” more available to independent programmers, who could then customize and improve them. In settlement talks last year, Microsoft agreed to liberalize programmers’ access but stopped far short of allowing development of Windows-compatible software by anyone who paid Microsoft for the privilege. Microsoft’s secrecy retards innovation, preventing software designers from customizing PCs and office networks to meet their customers’ unique needs.
An aggressive Bush administration effort to forge an out-of-court settlement could clear the litigation threat from Microsoft’s future, at the same time encouraging innovation by software developers working both inside and outside Microsoft.
