04/20/19 EPILOGUE: WEIGHING THE RISKS AND REWARDS

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EPILOGUE: WEIGHING THE RISKS AND REWARDS

Now comes the hard part. The Justice Dept. must ultimately decide what antitrust policy will best promote competition and innovation in the software industry. There is no obvious answer. Each of the three alternatives--do nothing, regulate, or break up--carries its own risks and rewards.
The laissez-faire solution is certainly the least disruptive in the short run and carries extra appeal given the current strength of America's high-tech sector. But it does run the risk that Microsoft will eventually squeeze out serious competition, leading to a stagnant software industry.
THIN LINE. By contrast, the regulatory approach would have the effect of increasing competition. It would also create a bit more room for innovators, though Microsoft would still have a dominant position. The downside: Extensive government interference could paralyze the industry. Indeed, increasingly the government will find itself having to tread a thin line between stopping bad practices and designing the company's products.
Breaking up Microsoft would be a big gamble. The reward: Such a radical step could ensure years of growth in high tech by opening the door for the next generation of innovators. The risk is that no one really understands the ingredients that make the U.S. software industry so successful. So by splitting up Microsoft, it's possible the government could kill the goose that lays the golden eggs.
What is Justice likely to do? Right now, its main concern is Microsoft's monopoly in operating systems. That's not illegal in itself, but trustbusters want to make sure that Microsoft is not maintaining its dominant position through anticompetitive practices. At the same time, regulators want to prevent the company from leveraging its strength in operating systems to create new monopolies in related markets.
That's why Justice may file suit against Microsoft by early May, seeking a preliminary injunction that would force the giant to offer a browserless version of Windows 98. The injunction might also end some exclusionary contracts and give PC makers control over icons on the Windows opening screen.
TEST OF LAW. Going forward, Justice officials are investigating other possibly anticompetitive practices and may bring a broader case in several months. The potential suit could address a laundry list of alleged wrongs: concerns that Microsoft is using its dominant position in operating systems to give an unfair advantage to Microsoft applications and Windows NT, the company's broad investments in Web video streaming, and its $125 million equity stake in rival Apple Computer Inc.
Just a decade ago, the conventional wisdom was that antitrust law was irrelevant. Now, Klein is trying to make his agency meaningful in the Age of the Internet. This is the case that will test whether antitrust still matters. No other issue confronting trustbusters is as crucial--or as difficult.
By Amy Cortese and Mike France in New York, Susan Garland in Washington, D.C., Steve Hamm in San Mateo, Calif., and Michael J. Mandel in New York

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