Still At Risk: Companies That Are Too Successful
Why can’t I stop worrying and learn to love a legal system that once again found the middle ground? Because the Justice Department’s proposed settlement to end its lawsuit against Microsoft does not reject the false premises on which the case was based.
Microsoft was singled out because it was very profitable and dominated important segments of the market for software. But high, sustained profits and large market shares are characteristic of many “new economy” industries. And neither implies a lack of competition in industries such as software, in which incumbents must innovate or die.
Most important here, the government never really asked the key question that applies to old and new economy industries: Did Microsoft’s behavior slow technological change or raise prices? Even the judge who would have condemned Microsoft to a speedy demise admitted that the company’s determination to become king of the Internet generated a windfall for consumers in the form of better products at lower cost.
Another pebble in my shoe is related to the origins of the case. The Clinton administration targeted Microsoft after the White House had been lobbied heavily by Microsoft’s archrivals Netscape (browsers), Sun Microsystems (servers) and Oracle (database software). Those rivals didn’t in the end get all they wanted. But their relatively modest investment in what has been called the political marketplace did tie Microsoft in knots for years. And the payoff was obviously large enough to encourage two other rivals, AOL Time Warner (Internet services) and Kodak (image processing software), to lobby Congress to slow the introduction of the latest version of Windows--a lobbying effort that may have succeeded if Sept. 11 hadn’t distracted Washington.
However, even I can count our blessings. Once the recession is over, there is good reason to expect high technology industries to flourish again. But Microsoft itself seems to have shrugged off the distractions of endless litigation. And I’m still having difficulty ignoring the reality that, as long as antitrust policy remains rudderless in a rapidly changing economic environment, companies such as Microsoft will remain at risk of being punished for their success.
