ABA Section of Business Law

ABA Section of Business Law
Business Law Today
September/October 1998

Microsoft: IBM Redux?

Is its journey through the courts a bumpy road or just another bend on the information superhighway?

By ELIOT G. DISNER

Disner is a partner at Ervin Cohen & Jessup, LLP, in Beverly Hills, Calif. He is the author of Antitrust for Business: Questions and Answers. Kenneth H. Abbe, an associate at the firm, provided valuable assistance in the preparation of this article. The article was adapted and updated by the author from a piece written for the Los Angeles Daily Journal. It has graciously consented to the publication of this adaptation.

On May 18, the U.S. Department of Justice Antitrust Division and attorneys general from 20 states, plus the District of Columbia, combined to charge Microsoft Corp. with violating the Sherman Act by, among other things, tying the sales of its Windows operating system to sales of its Internet Explorer Web browser. Within a month, Microsoft began to ship to computer manufacturers the latest version of its operating system, Windows 98. Windows 98 contains a version of Internet Explorer that Microsoft claims is "integrated" into it.

But it is being sold with a cloud hanging over its head: A federal district judge in Washington now controls the destiny of Windows 98, and to some extent, Microsoft itself. On Sept. 8, trial begins there to determine once and for all, or at least for the foreseeable future, whether Microsoft has run afoul of the antitrust laws. The principal issue for the government is: Did Microsoft illegally leverage its apparent market power in operating systems to suppress competition in the adjacent Web browser market? The issue for Microsoft, of course, is whether it will be permitted to build on its phenomenal growth and success - a success fueled by both innovation and aggressive marketing. Now, the ultimate question is: Has Microsoft's aggressive marketing resulted in an antitrust violation - because it apparently restricts the ability of others to innovate and compete against it?

The Justice Department's complaint is interesting, if for no other reason than it includes several fascinating excerpts dredged out of Microsoft's records. Those excerpts reveal a Microsoft fearful of competition for its flagship product, Windows 95 (and now 98), from Web browsers like Netscape Navigator. By delivering software applications to consumers directly over the Internet, Web browsers hold out the possibility of supplanting operating systems (like Windows 95) altogether. As my grandmother once said, in a somewhat unrelated context, "If you can get the milk for free, why buy the cow?" This is apparently how the cow, Microsoft, perceives matters, if its internal documents truly reflect its thinking.

In order to prevent the world from bypassing it, Microsoft is alleged to have forced computer manufacturers to accept Internet Explorer with the purchase of Windows. It then prohibited these manufacturers from modifying the initial appearance of the Windows desktop - which prominently features Internet Explorer. To those of us who turn on computers every workday and blow right by the boot-up screen to get where we need to go, this issue seems like a pretty trivial one to be all worked up about - but it surely must matter to Microsoft because it has been most reluctant to give it up. Nonetheless, Microsoft recently made a "special deal" with Gateway Inc. to permit it to customize the desktop screens on its computers to include another Web browser. But there has been no indication that Microsoft will similarly relent for others.

The complaints also claim that Microsoft made exclusionary agreements with Internet content providers (like CNN), Internet service providers (like Earthlink), and online services (like AOL) to promote exclusively its Web browser in exchange for their icons appearing on the Windows 95 desktop. While Microsoft did recently remove certain exclusionary provisions from its contracts with Internet service and content providers, the complaints allege that remaining contracts continue to prevent other browsers from being distributed by online services to their customers, who constitute the majority of end users.

Microsoft responded to the governments' myriad allegations in its now characteristic style, essentially asking, "What, me worry?" Its general counsel said, dismissively, "Antitrust laws are designed to protect consumers, not competitors," apparently little realizing that it is only by preserving competitors that consumers are, in the final analysis, "protected." Arguing that the software industry is so fluid that no company can exercise monopoly power in it, Microsoft charged the government with stifling innovation solely to benefit its (Microsoft's) less innovative competitors.

Ironically, it was one of those competitors, Netscape, that spurred Microsoft to "integrate" Internet Explorer into Windows 95 in the first place - because consumers and developers demanded the browser-based application functionality, i.e., the free milk, that Netscape planned to deliver with later versions of Navigator. At the same time, Netscape's attractiveness spurred Microsoft to develop an improved version of Internet Explorer that earned a rapid sales increase through an outbreak of competition on the merits. Buoyed by this success, Microsoft now claims that any restrictive licensing agreements for Windows or Internet Explorer are legitimate attempts to preserve its successful brand identity in a highly competitive market.

The complaints filed by the Justice Department and the states' attorneys general request substantial injunctive relief: Microsoft would be enjoined from "bundling" Internet Explorer with Windows 98, or alternatively required to include Netscape Navigator and one other browser in its bundle (much like the traded minor league player "to be named later"). Also, computer manufacturers would be permitted to modify the appearance and functionality of Windows operating systems installed on their machines without having to first provide end users with an unaltered version of Windows. Further, any agreements limiting Internet content providers, Internet service providers, and online services to promoting only Internet Explorer would be forbidden.

Of course, the starting point for Microsoft's problems here has been its success in gaining market share for Windows 95, now running on more than 90 percent of America's personal computers. Thus, it is not surprising that Greg Maffei, Microsoft's chief financial officer, while continuing to claim that Microsoft has no monopoly power, ominously - and somewhat inconsistently - warned in early May that any government-imposed delay in the release of Windows 98 could have a devastating effect on the software industry and perhaps the U.S. economy as a whole! Does this conundrum now preclude enforcement of the antitrust laws against Microsoft - has it earned a bye? Or instead, does it compel such enforcement?

The seeds of the government's recent assault on Microsoft were planted back in 1994. At that time, after years of investigating at its customary glacial speed, the government brought a lawsuit against Microsoft, later accompanied by a negotiated consent decree that many said was insufficient to cure the ails perceived at the time. Pursuant to that Aug. 21, 1995, decree, the Department of Justice went to court last year to take its best shot at holding Microsoft in contempt for failing to keep separate its Internet Explorer Web browser from its Windows 95 operating software. Like many negotiated settlements, the consent decree was not a model of clarity. Thus, the parties vigorously argued their positions, principally by drawing from the bits and pieces of seemingly conflicting language planted for just such a rainy day.

The government's position in the contempt proceedings - like its current complaint - was that Internet Explorer was sold by Microsoft "with" its Windows 95 operating software, not as "part of" it. From this vantage point, the government's burden seemed rather light and, at the time, proved to be so, at least in the D.C. District Court of Judge Thomas Penfield Jackson. For all the Justice Department had to prove there was that Internet Explorer was a different product from Windows 95. The fact that Microsoft marketed and sold its Internet Explorer separate from Windows 95, both for its own various operating systems and for those of its few competitors, seemed sufficient to prove there were two different products here, notwithstanding Microsoft's claim of "integration."

The government argued then, as now, that Microsoft conditioned the licensing of Windows 95 on the licensing of its Internet Explorer. In one well-known instance of this practice, when Compaq advised Microsoft that it wished to acquire from it only Windows 95 for its new Presario line, so it could install Netscape's Web browser, Microsoft refused to deal with it. Given Compaq's options - going with Flo and Eddie's operating system, so it could then patronize Netscape, or agreeing to Microsoft's requirement that it put up with its Internet Explorer to get its Windows 95 software, Compaq capitulated.

How does Microsoft justify its business decision to bundle its products? It claims its Internet Explorer is really a "feature" that has been "integrated" into Windows 95, i.e., it is just one big, happy product. By so claiming, Microsoft hoped to trump both the consent decree and the antitrust laws. For the consent decree did explicitly permit Microsoft to develop "integrated" products, whatever that term meant (as the decree itself neglected to define it). The antitrust laws themselves do not proscribe the combined sale of certain integrated products, where such integration is essential to the operation of the tying product, such as tires for automobiles or refrigerator shelves for refrigerators.

Interestingly, Microsoft's document excerpts, contained in the Justice Department's May 18 complaint, reveal that (to the extent the presence of Netscape Navigator was not a sufficient motivator), its "integration" of Internet Explorer into Windows 95 may have been motivated as much by a desire to fit into the consent decree's language, as by any inherent desire to improve its product. Who says the government is never here to help? It apparently helped to give Microsoft a presentable defense - indeed, one that ended up carrying the day at the court of appeals in reviewing Judge Jackson's decision (but I jump ahead).

On Dec. 11, 1997, after wading through the mass of papers earnestly filed, Judge Jackson issued the court's preliminary ruling. The court held that Microsoft was not in contempt of the decree. Nonetheless, by applying traditional antitrust analysis to assess Microsoft's conduct, it ordered Microsoft to unbundle its Web browser from its ubiquitous operating software until such time as a decision could be made whether to permanently enjoin this link.

Giving fairly short shrift to the safe harbor of "integration" contained within the consent decree, the court observed that two "integrated" products may still be unlawfully tied together if they are separable (using as an example the anesthesiology services that were provided with other hospital services by a hospital in Louisiana, which services were found to be two separate services by the U.S. Supreme Court in Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984)). It then found that however "integrated" Microsoft's operating system was with its Web browser, at least under the antitrust laws, these appeared to be two separate products, hence the injunction.

On April 21, 1998, the U.S. Court of Appeals for the District of Columbia Circuit heard Microsoft's appeal of the preliminary injunction order. Some two months later, on June 23, that court overturned that injunction on both procedural and substantive grounds. U.S. v. Microsoft Corp., 1998 U.S.App. LEXIS 13242 (D.C. Cir. 1998). The district court's first error, per the reviewing court, was its failure to provide adequate notice to Microsoft that it would eschew the consent decree and embrace the Clayton Act, thus providing relief somewhat different than the government had sought. The appellate court also found lacking the Justice Department's proof that consumers would suffer irreparable harm if Microsoft's bundling practices were not promptly enjoined.

The court of appeals then went beyond this narrow ruling, however, and observed that since the government did not adequately dispute that Windows 95 and Internet Explorer do provide at least some added benefits to consumers when combined, they must be "integrated," thus incapable of violating the consent decree. In sharply worded dictum, the court observed that the record to date disclosed no illegal "tying" arrangement because Windows 95 and Internet Explorer did not appear to be two separate products after all. To the government's argument that Internet Explorer was a separate product from Windows 95, the court observed that the appearance of separate sales notwithstanding, such sales were, in fact, of different versions of Microsoft's Web browser. Hence, the Internet Explorer sold for other computer systems is not the same product as the Internet Explorer "integrated" into Windows 95.

In sum, the court counseled as follows: "We think that an 'integrated product' is . . . a product that combines functionalities . . . in a way that offers advantages unavailable if the functionalities are bought separately and combined by the purchaser. . . . There must be some technological value to integration." While the court then stated that its "factual conclusion is subject to reexamination on a more complete record," it nevertheless held that deference should be paid to Microsoft's own claim of integration. "We suggest here only that the limited competence of courts to evaluate high-tech product designs and the high cost of error should make them wary of second-guessing the claimed benefits of a particular design decision" (emphasis added). Thus, Microsoft's claim: essentially that one (operating system) + one (Web browser) = three (integrated system with synergies not available from the one + one standing alone), carried the day - at least to the extent the court decided to vacate the preliminary injunction under the 1994 consent decree.

Judge Wald, one of three judges on the court of appeals' panel, concurred only with the procedural portion of the majority's decision. In her concurrence, Judge Wald expressed concern that that decision, although limited by its terms to interpreting the 1994 consent decree, seemed to create an exception for software from the laws against tying. Certainly, the appellate courts' admonition that (other) courts not "second-guess" a manufacturer's (i.e., a defendant's) claims in "high-tech" antitrust cases would seem to put a thumb on a defendant's side of the scales of justice - from at least a plaintiff's perspective. The irony here is that the opinion of the appellate court itself betrayed a deep understanding of all the "high-tech" matters at issue there; its level of competence is a long way from "limited." This is probably because young law clerks, who draft opinions for their bosses, are frequently well versed on such matters.

The last chapters in this epic battle have yet to be written. For Judge Jackson, who penned the 1997 "Consent Decree" opinion, finding an illegal tie-in by Microsoft, is the same judge who will be trying the claims in the May 18 complaints. The early betting did not favor Microsoft, given the hand it was dealt - a trial to begin just months after two massive complaints are filed, in a court where Microsoft lost its first round.

However, the June decision of the court of appeals now has persuaded many commentators to doubt that the Justice Department will be able to prove its Windows 98/Internet Explorer tying claim, even if it prevails on the issue of Microsoft's restrictive licensing agreements.

Whatever transpires in Washington, the government's current campaign against Microsoft, and particularly the "antitrust-style" handling of the prior enforcement issue by the district court and the court of appeals, prompt larger questions about bundling practices in general, as well as the real or apparent predicament of other software competitors. Some of those competitors, such as Netscape, increasingly perceive themselves to be on the outside looking in because they are no longer needed on any consumer's system - any more than you need a second clock on your office wall. Indeed, the most recent quarterly report of Netscape, reflecting diminished sales and no profits, plus reports of massive gains in Microsoft's Web browser market share would tend to confirm this perception.

The concerns of certain of Microsoft's competitors, Netscape, Oracle and Sun Microsystems (all outspoken Microsoft critics), prompted them to band together to form the lobbying group, "Project to Promote Competition and Innovation in the Digital Age." This is a group that must be taken seriously, if only because the combination of the first letter of each word does not spell another word.

To begin this analysis, it may be helpful to reflect back on what was occurring in the data management and retrieval business just a generation ago. The company that set the marketing rules then was IBM. In its heyday, all roads led to IBM, for it then controlled computer hardware, much the way Microsoft now controls computer operating systems. IBM too was the target of a massive federal antitrust lawsuit and at least some public antipathy. IBM too was accused of bundling its various (hardware) products together, or at least making it extremely difficult for competing manufacturers of peripheral products to connect to IBM's computers.

Although IBM managed to survive the government's attack, it came within an inch of its corporate life when history swept it up like a virtual tornado, then dropped it back down on the edge of the information superhighway. Software, the immediate purveyor of information, now travels down the center of that highway, while hardware pulls from the sidelines. (Picture a mule pulling a barge down the Erie Canal and you have the right image here.)

Advances in processor and data storage technology have put powerful computers into widespread use at reduced prices and opened up the market to a multitude of sellers. The hardware market has become too fluid to be cornered by IBM - or anyone else.

Microsoft has focused solely on microprocessor software, as its name reveals. From this platform, in an effort to control the market(s) where it competes, Microsoft has employed tactics similar to those IBM employed in the 1960s and `70s. Not surprisingly, Microsoft is now eliciting the same aggressive reaction from government and private law enforcers as IBM did a generation ago.

Microsoft has not confined its bundling practices to the Internet Explorer however. It has also bundled other software products into the operating systems provided to its customers, as the state attorneys general charged in their complaints in connection with Microsoft's "Office" package, for example. Is this all illegal, or even harmful? To answer this question requires a broader understanding, or at least some explanation, of the consequences of bundling. It should be noted that this question was never definitively answered in the government's IBM litigation since one of the first acts of the Reagan administration back in 1981 was to pull the plug on that case just short of trial.

Consider instead perhaps the greatest bundler in recent memory - the telephone company. For decades, AT&T, through its Western Electric subsidiary, controlled the manufacturing of telephone equipment. Telephone use then was tied to monthly service. During many of those years, telephones were of the black, rotary-dial, desktop (real, not cyber) variety. Then, a handful of colors was introduced. Then, along came the "princess" phone. Finally, the touchtone phone emerged. Voilà.

But even that breakthrough did not lead to any radically different designs or functionality. However innovative AT&T seemed to be in its Bell Labs Division, when it came to telephones, little seemed to come out of Western Electric beyond the basic desk unit.

In the early 1980s, after the government "vindicated" IBM, it focused its antitrust enforcement glare on AT&T. The Federal Communications Commission, which, among other things, regulated telephone service, also paid then-uncharacteristic attention to competition in this area. By 1984, the unbundling of AT&T was complete. By then, AT&T could no longer force its customers to use its durable, but spiritless, telephones.

What has happened in the telephone equipment business since the early 1980s has been nothing short of revolutionary. Telephones have been taught to remember dozens of numbers; they operate without wires; they have become smaller; the buttons on them have become larger; some look like footballs; some look like foreign cars. Very few look like traditional Western Electric desk sets any more.

Telephones also became inexpensive - so inexpensive that they have been given away with magazine subscriptions or a few gallons of gas. Now, there are hundreds of different styles and sizes of telephones on the market, with the greatest imaginable variety of features - at a wide variety of prices. Now, we all own more than the one extension that used to be rented from the phone company for mom and dad's bedroom.

Even Western Electric kept up with its new-found competition and substantially improved its own product line. Admittedly, some of the credit for this proliferation of products may be given to recent developments in microchip technology. But at least some of these competitive choices would surely never have been available had AT&T's tie-in continued.

What's wrong with bundling then? Bundling stifles innovation. While bundling sometimes seems to provide free goods to the user, those goods are never truly free if the effect is to drive out or discourage innovative competitors for the bundled product. While the advantages to the consumer of true integration cannot be gainsaid and there are times when it may be fair to trade off future innovation for such present benefits, the problem is how one quantitatively measures the benefits of integration. Would an otherwise illegal tie-in be justified if there are slight integrative benefits? These are difficult questions, yet to be addressed by the courts.

But one thing is certian. Once rivals are blocked from the market or knocked out of it, those erstwhile rivals will obviously never innovate there again. Nor can they push the bundler to improve its own product (like Netscape apparently did for Microsoft) in order to retain its market position.

The sub-specialty of surface chemistry teaches, among other things, that the greater the exposed surface of a particular solid, the more it will absorb the surrounding solvent (a sponge being a paradigm of absorption for that reason). The phenomenon of innovation operates no differently. The more "surface" a marketplace reveals, i.e., the more opportunities for competitors it permits, the more innovation there is sure to be.

So here, for example, the bundling of various otherwise discrete pieces of software into one so-called "package," which includes the one piece of software no others will operate without, necessarily reduces the absorbable surface. Since there will be little demand for any of the pieces standing alone, a potential competitor is unlikely to work to develop any such piece. The market then becomes an uninviting place, resembling in the surface-chemistry metaphor, a lead weight that will absorb little, if anything, from its environment.

This is not likely to be a permanent condition however. Ultimately, the bundler is likely to become the bungler. Its anchor product will no longer prove to be indispensable and competition will re- emerge. But that all occurs in the long run, and by then, of course, we're all dead. In the meantime, would-be competitors are shut out of the market and consumers are deprived of the competitive choices available in a free market, including the right to reject the tied product altogether. Now, perhaps, one can begin to understand why the government and many others are concerned about how Microsoft does business, even if there are some integrative advantages from the tie.

What laws might the government, disgruntled competitors and customers apply to reopen this market? The two antitrust laws that are most pertinent here are Section 3 of the Clayton Act (15 U.S.C. Section 14) and Section 1 of the Sherman Act which, inter alia, prohibit certain tying practices, and Section 2 of the Sherman Act (15 U.S.C. Section 2) which prohibits monopolization and attempted monopolization. There are also various state laws that operate similarly. Might Microsoft violate any of these laws? The elements of a violation of Section 1 of the Sherman Act and Section 3 of the Clayton Act are the following:

• there must be at least two separate products;
• those products must be tied together;
• the perpetrator must have sufficient economic power in the market of the tying product to permit it to require the purchase (or license) of the tied product; and
• there must be a pecuniary loss to victims of the tie-in - whether they be customers or competitors.

If these elements must be boiled down to one question, it would be this: How easy is it for a purchaser of the tying product (the one it really wants) to avoid the consequences of the tie, i.e., being forced to acquire the tied product (the one it does not really want)? Thus, in a market of 10 equal competitors, if just one company ties some unwanted product to its desired product, a purchaser will still have plenty of choices for the desired product, and can readily avoid the linked products altogether. However, when the customer is "locked in" to the tying product, say because the tie-in does not actually arise until after he acquires the product (for example, by being informed after the purchase that it must use the seller's own parts organization for repairing the tying product down the road), or where there is limited competition for the tying product in the first place, then the anti-tying laws are likely to be violated.

Although some commentators have viewed the Microsoft litigation merely as a battle between Microsoft and the government, that is probably somewhat shortsighted. Given Microsoft's palpable power in the operating software market, the fact that it is including its Internet Explorer with Windows (whether it be integrated or separate) still may fit the pattern of a violator of the anti-tying laws - as the district court opinion in the consent decree case quite easily concluded.

For, in order to violate Section 3 of the Clayton Act and 1 of the Sherman Act, one need not even be a monopolist. A market share in excess of 30 percent is generally sufficient. See Jefferson Parish, supra. In fact, Microsoft now controls more than 90 percent of the operating software market in this country, a percentage that has been rising over the years. Plainly, this math would seem to assure Microsoft at least a partial defeat in its battle with the government, assuming, of course, the case can be made that there are really two separate products here.

Section 2 of the Sherman Act (15 U.S.C. §2) is concerned with the consequences of the unchecked accumulation of monopoly power, to wit, the suppression of actual and potential competition to the monopolist. In the case of Microsoft's Internet Explorer, of course, the company with the most to lose is Netscape, heretofore the largest provider of Web browsers. If Netscape expires, down will go a product whose record of quality and innovation is comparable, if not superior, to Microsoft's. Until recently, Netscape also was viewed as the best hope to break Microsoft's operating system hegemony because of the possibility that it might bring network extensions off the Internet straight home to you.

A company with Microsoft's share of the operating-software market would normally be said to have "monopoly power" in that market. Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985). Given its share of the market, Microsoft may also be vulnerable then to Section 2's prohibition against anticompetitive behavior by a monopolist - in this case by leveraging its power into another market, namely the Web browser market and perhaps others.

Important to the issue of Microsoft's possible violation of Section 2 is the height of entry barriers in the relevant market, i.e., the likelihood that significant new entry will emerge and erode its market power for operating and other software. Here, entry barriers seem high, principally because a new operating system developer is likely to be daunted by the lack of compatible software products for such a system. This is a concern even to Apple, which has long occupied a distant second place in the market. To the same effect, new application software producers are likely to be discouraged by incumbent software entrenched in the market because of its privileged placement in Microsoft's "package."

On the other hand, the possible rise of a competing technology, which may bypass operating system software completely, and open opportunities for new application software competition (whether downloadable off the Internet or sold at the nearby Broken Egg Software Store), suggests entry barriers may not be so high. Unfortunately, there is no precise way to measure this. This uncertainty, of course, is likely to plague government enforcers generally in decisions whether to wait and see or to prosecute in such high-tech situations.

In the Microsoft case, however, entry barriers may be elevated artificially because Microsoft has increasingly taken significant positions in adjacent markets from which future competition into the operating system market might otherwise arise. Thus, Microsoft recently bought Web TV. It also bought into Apple. Moreover, Microsoft began to provide Java-based programs (wherein Java was adapted by Microsoft for its own use, to the exclusion of software sellers sans Microsoft license) and, of course, online services (with the Microsoft Network). These are market segments from which Microsoft itself claims operating system competition is likely to arise. All in all, Microsoft has made some 40 acquisitions over the last two years. Whether this strategy will actually stifle new competition remains to be seen.

What can be said in sum is that today Microsoft seems more imaginative in "handling" its competition than IBM used to be. In the long run, however, that kind of creativity may well prove to be like Chinese handcuffs - the more Microsoft demonstrates its marketing agility, the tighter it may be cuffed. Plus, unlike IBM, Microsoft has attracted a multi-level and bipartisan list of adversaries.

Over the past decade or so, antitrust enforcement also has spread out to the states, largely because of the dry spell in federal antitrust law enforcement in the 1980s, and a conservative Supreme Court that promoted a states' rights agenda. See California v. ARC America Corp., 490 U.S. 93 (1989). That agenda concomitantly empowered the states to enforce their own antitrust laws, undoubtedly resulting in the current 20-state effort against Microsoft. Bipartisan antagonism against Microsoft has also developed, if only because its disgruntled competitors and customers turn out to be scattered among numerous congressional districts.

Apparently, one downside of being a monopolist in a not very labor-intensive field, making an easily shipped product, is that its business may be "isolated" in few places, so that there are few politicians affected sufficiently to pick up the fight for it. This certainly seems true for Microsoft. Here, the matter for Microsoft is even compounded a bit since some of its operations are not in the United States at all.

While Microsoft may continue for some time to battle state and federal governments, plus its competitors, a second question emerges in this debate: What becomes of others in the cyberworld with respect to antitrust law enforcement? While there is no exemption under the antitrust laws for high-tech businesses, the government is likely to be cautious in seeking to remedy ostensibly anticompetitive practices committed by high-tech firms because such firms may more easily be upended, or the market redefined, by an upstart that develops new technology. This is the concern articulated by the court of appeals in its June 23 decision.

Plainly, this caution helps to explain the rather deliberate pace of the government's decision-making on antitrust matters in high-tech industries over the years. When the government perceives that market forces are likely to correct an imbalance before the judicial system does, it is much more likely to wait to see what happens. Undoubtedly, the Justice Department also still remembers that its suit against IBM consumed some 12 years and literally forests of trees until it was unceremoniously dumped.

This is not to say the government always serves as an observer, however. Thus, while the Federal Trade Commission passed on the opportunity to go after Microsoft, it recently brought an action in administrative court against Intel, the dominant computer chip manufacturer. The commission alleged that Intel violated the antitrust laws by withholding technical information regarding its Pentium chips from its adversaries and leveraging its dominance in those chips into adjacent markets. Unlike Microsoft recently, Intel has a reputation for working things out when the government knocks on its door. Indeed, the only public spat between Intel and the commission thus far has been over the manner in which the FTC staff sought to curry favor among antitrust commentators for its position. Intel may yet settle the administrative action with the commission. Of course, this is not to say that Intel will not try some other way, on some other day to flex its muscle--to play its Pentium chip, as it were.

Also, nothing prohibits competitors or customers, who historically move matters to trial more quickly than the government, and who are not otherwise subject to its flop flops in ideology, from bringing private lawsuits. Indeed, more than 75 percent of all antitrust lawsuits are brought privately. Those private plaintiffs that manage to run the litigation gauntlet and win are rewarded with triple their damages, plus their attorney fees (15 U.S.C. Section 15(a)).

With the very survival of some of Microsoft's competitors apparently at stake, litigation is actually beginning to look like an attractive option to some of them. Indeed, after whining about Microsoft for years, Sun Microsystems recently got around to initiating its own lawsuit against it.

One might also wonder whether new laws are necessary to provide a safe harbor for innovating companies that might otherwise violate the antitrust laws, or to protect such innovators so that they are not hampered upstream or downstream by suppliers or vendors, or laterally by competitors. The short answer is that new laws are not as important as clearly defined and determined law enforcement. The existing laws can be extremely potent.

However, over the past 20 years or so, there has been a general timidity or philosophical unwillingness, or both, about enforcing those laws to their fullest. With respect to Microsoft, if the IBM experience is any indication, the aggressiveness of antitrust law enforcement by prosecutors, plaintiffs, and ultimately, judges will have more to do with whether Microsoft is regulated than with the extent or specifics of its purported predatory practices. High-tech industry or not, as a practical matter, the antitrust laws are unlikely to be forever stuck in a seldom-opened box like the ventriloquist Senor Wences' disembodied head, whose discourse with the senor was limited to: "All right? All right!" - when unjustifiable and potentially long-term market foreclosure actually occurs.

Consider too that recently Bob, Dole, bellwether of the Republican Party, wrote an op-ed piece in the New York Times questioning Microsoft's market power. Robert Bork, patron saint of arch-conservative antitrust theory (now, however, Netscape's paid spokesman), also supports the current actions against Microsoft. In addition, Sen. Orrin Hatch has railed on against Microsoft in the U.S. Senate. If this is any indication of the mainstream Republican thinking, Microsoft could be in for a long siege-no matter who wins the White House in years to come.