Hyperbole and Antitrust Politics

Readers of this blog know that I am an antitrust lawyer and that I've worked on the United States v. Microsoft antitrust case -- for the competitive side of the software industry -- for years. Well, now we have a situation in which the European Union has accomplished something that the U.S. government failed to do in its nearly decade-long prosecution of Microsoft: it issued a meaningful punishment to the Redmond monolith. Microsoft was found to have violated the U.S. antitrust laws by bundling Internet Explorer (IE) into Windows in order to prevent competition from then-insurgent Netscape. Yet American antitrust officials squandered that judgment in favor of a sell-out settlement that allows Microsoft to continue the same practice of integrating new functions into Windows -- backed by no technical or efficiency justifications, rather only to stifle competition -- that the government's landmark case had proven was intended only to maintain the Windows PC monopoly.

By forcing Microsoft to unbundle Media Player from Windows, the European Union is doing just what the United States tried (but then lost the balls to stay the course) when it fought to force divestiture. So, what is the reaction of the U.S. Justice Department to the EU's remedy? On an objective basis, they should applaud it, saying that the EU hung tough and persevered to a conclusion that achieves the very results the U.S. case sought. Instead, the Justice Department's antitrust czar releases a statement calling the EU decision a threat to innovation, because "[i]mposing antitrust liability on the basis of product enhancements and imposing 'code removal' remedies may produce unintended consequences." Yet as Paul La Monica cogently observed for CNN, "if Microsoft no longer can rely on bundling, isn't it reasonable to argue that Microsoft would need to work harder in order to build a product that's truly better than the competition? If anything, Microsoft would need to be more innovative, not less."

The Bush Justice Department, some might say like the White House itself, is riddled with double-speak and hyperbole. Well, repeating myths may work in electoral politics, but it doesn't suffice for antitrust. The EU is not a threat to innovation; monopoly surely is. Just as they like fat-cat lobbyists and haven't met a billionaire they didn't want to curry favor with, the Bushies now pretend that monopolies are good for innovation and benefit consumers. The worst part is that, just two months ago, the federal judge overseeing the U.S. Microsoft settlement found on-the-record that it wasn't working at all as the Bush DOJ had promised. Like Rick's bristo in Casablanca, I am shocked to learn there's gambling going on here!@!

 Posted by glenn