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Let The Market Regulate Microsoft


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LET THE MARKET REGULATE MICROSOFT

When is a computer operating system like a railroad bridge? Nutty as the question sounds, it appears to be at the heart of the Justice Dept.'s antitrust case against Microsoft. After four years of investigation and a small fortune in taxpayer dollars, the feds appear finally ready to charge Microsoft with monopolistic practices.

Why the railroad-bridge analogy? Because the trustbusters are trying to apply regulations born in the days of railroads to the new digital age. Under Assistant Attorney General for Antitrust Anne K. Bingaman, Justice is arguing that just as a railroad that owned the single bridge over a river had to allow other railroads to use that bridge, so, too, must Microsoft permit all other applications-software writers full access to its dominant operating system. That system, MS-DOS and Windows, may be deemed an "essential facility" by Justice because it is an essential "bridge" to writing new applications programs (page 56).

The trouble with Justice's theory is that Microsoft already gives other software companies broad access to its operating software. But, rivals charge, Microsoft's own applications writers often get earlier access to data, giving them an edge. And Microsoft does acknowledge it reserves a portion of its operating system for itself.

Yet none of this may matter. Even as Microsoft's power reaches its peak, changing markets are eviscerating Justice's case. Today, Microsoft holds about 80% of the operating systems market for desktop PCs. But the industry's center of gravity is quickly shifting to new, high-speed networks.

Microsoft is already battling a different breed of competitor and not doing particularly well. Its new server operating system, Windows NT, has done poorly against Novell's NetWare. Winpad, Microsoft's operating system for PDAs, is still struggling after six years. Time Warner has rebuffed Microsoft on interactive TV, and AT&T turned it down cold for rivals Novell and Lotus for a new business network.

Should Justice proceed with its "essential facilities" argument, it could take years to litigate or settle. By then, its judgment will be moot. Fast-changing technology showed IBM no mercy, even after Justice dropped its antitrust case against it. Technology will have no compassion for Microsoft either, Justice notwithstanding. It's time to drop the case.


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