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Again, The Ftc Begs To Dither


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AGAIN, THE FTC BEGS TO DITHER

The air at the July 16 meeting was frosty. On one side of a table at the Federal Trade Commission was William H. Gates III, the billionaire chairman of Microsoft Corp., for three years the target of an antitrust investigation. On the other sat Commissioner Mary L. Azcuenaga, the potential swing vote in any decision to pursue the affair. Azcuenaga listened quietly as Gates argued that she should leave his company alone. When it was over, nobody had any idea how the chips might fall. "She held her cards close to the vest," says one person familiar with the meeting.

There's no answer yet. At a nonpublic meeting on July 21, the commissioners deadlocked 2-2 on whether to file antitrust charges against Microsoft, with Azcuenaga voting against. Neither could they decide to drop the case, FTC insiders say. Just a week earlier, the commission dropped its investigation of Intel Corp. following a two-year investigation. Says one FTC attorney: "There are a lot of people who are embarrassed they couldn't decide and get on with it."

DE FACTO DECISION. The latest nonaction effectively means a victory for Microsoft, one commissioner said afterward, given that the status quo will be maintained. Indeed, the case appears caught in terminal gridlock: The commissioners' last meeting on the matter, in February, ended with the same result. In the months that followed, they dithered over taking up the matter again.

There is still a chance that the case may make its way to the Justice Dept.'s antitrust division. That would be fine with Microsoft's rivals, which have hustled to keep the matter center stage. Novell Inc. hired former FTC General Counsel Michael N. Sohn, who is highly regarded by commission staffers. And Novell and others have encouraged Representative Jack Brooks (D-Tex.) to hold hearings on the issue of competitiveness in software. "There are ways that nongovernmental people have involved themselves in this process that are amazing and inappropriate," says Gates. To those involved in the case, what seems most inappropriate is the FTC's inability to make a decision.Mark Lewyn in Washington, with Richard Brandt in San Francisco


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