I just returned from Seattle, where Microsoft chairman and founder Bill Gates is the hometown hero in his uphill battle against Uncle Sam. It's Gates versus Federal District Judge Thomas Penfield Jackson and Microsoft versus the Justice Department. The judge won round one and Gates won round two in what promises to be a 10-round championship fight.
Judge Jackson ruled against Gates June 7 in the Justice Department's antitrust lawsuit against Microsoft, ordering that the highly successful software giant be broken up and submit to a number of restrictions on its business practices. But on Tuesday, Gates won a preliminary victory when the U.S. Circuit Court of Appeals for the District of Columbia agreed to hear Microsoft's appeal even as the Department attempted to bypass the Court of Appeals in favor of a quick decision on the appeal by the U.S. Supreme Court. The company has asked the Appeals Court to stay the judge's order.
Gates, the ex-computer nerd who built a multi-billion-dollar empire on the eastern shore of Lake Washington, has remained defiant throughout this high-stakes legal battle. After agreeing to a consent decree in 1995, Gates appeared on "Larry King Live" and said, "That whole thing (the decree) really has no effect on Microsoft or how we work .... What it comes down to is that there is nothing significant that we needed to change, and that just confirms the way we've viewed it all along." "By making that statement," wrote David Streitfeld of the Washington Post, "Gates helped ensure there would be a lot more years, a lot more documents and that Microsoft would be changed after all."
"Gates openly ridiculed the consent decree," added Luke Froeb, a former government antitrust economist who now teaches at Vanderbilt University. "He just made Justice look bad.... They weren't going to bargain like that with him again." And after Judge Jackson handed down his June 7 decision, Gates did it again. "Today is the first day of the rest of this case," he said. "We have strong legal, factual and procedural arguments.... We'll win on appeal." But even if Gates is arrogant and undiplomatic, is Microsoft really an out-of-control monopoly that stifles all competition in the highly competitive software industry?
Perhaps, as Robert W. Crandall, a senior fellow at the conservative Brookings Institution suggested in the Wall Street Journal last Wednesday, the remedy is worse than the disease. "Judge Jackson's decision to break Microsoft into two parts in order to 'create' competition is not only scary for software users, but virtually unprecedented as an antitrust remedy," Crandall wrote, noting that the company hasn't been charged with price fixing or attempting to control the Web browser market by buying up competitors, the usual grounds for prosecution under federal antitrust laws.
"Nothing in the historical record of antitrust should make us confident that the court's dismemberment of one of the most successful companies in history would increase competition," Crandall concluded. And although I'm certainly not an expert in antitrust law or business economics, I tend to agree. After reading a lot of material on Judge Jackson's decision and Microsoft's response, I'm still unable to understand what crime the company has committed.
As a user of Microsoft's Windows 95 operating system and Microsoft Word, and as a native of Seattle, I admit to a certain lack of objectivity when it comes to Gates and his little computer company. Along with Nordstrom's, Starbucks, Costco and Amazon.com - all of which came into existence after I left my hometown - Microsoft rejuvenated Seattle's economy after a downturn resulting from Boeing's continuing struggles. So the question remains, Why should the government punish Microsoft for being successful?
Kenneth Smith of the Washington Times asked two more pertinent questions: "Who is the real public servant - a company whose software innovation benefited 'many, if not most, consumers,' in the words of a federal judge? Or is it the government agency that is seeking to break up the company for supposedly ... violating antitrust laws?" The Justice Department argues that it's serving the public interest better than Microsoft, "which must give the public what it wants on a daily basis or risk going out of business." Take your pick. I choose Microsoft.
At this point, let's remember that Attorney General Janet Reno, who heads the Justice Department, has been unable, or unwilling, to get to the bottom of the 1996 Clinton/Gore campaign finance scandals in which the Democrats raised large sums of money from impoverished Buddhist nuns and Chinese Communists (see last Sunday's column). By now, the complacent Ms. Reno is an embarrassment to the office she holds and the administration she serves. She unleashes an army of government attorneys to investigate Bill Gates and Microsoft while turning a blind eye to the blatant corruption of our political system by hostile foreigners. What's going on here?
Presidential candidates George W. Bush and Al Gore (who invented the Internet, by the way) have been curiously silent on the Microsoft case. Will either of them have the courage to speak up before the Justice Department exacts its pound of flesh from Bill Gates? Hint: Don't hold your breath waiting for statements from Bush or Gore. They're still reading the polls ... and will be all the way to November.
(Guy W. Farmer, a semi-retired journalist and former U.S. diplomat, resides in Carson City.)