Microsoft's Fatal Error
Judge Thomas Penfield Jackson's factual findings in United States v. Microsoft, released November 5, spell the doom of Microsoft as we have known it. Forget what you hear about "might change on appeal." Judge Jackson's legal conclusions, which he hasn't yet announced, will be subject to very careful appellate review all the way to the Supreme Court, if Microsoft wants to go there. But no one is likely to mess with his facts. The trial judge is the one who hears the witnesses, and higher courts respect the difference between live evidence and the cold record too much to change his factual findings. Those facts can be used against Microsoft in other litigation, of which there will soon be plenty, without having to be proved all over again.
The facts now proven are that Microsoft monopolized a critical piece of the market for computer software: the operating system for Intel-based personal computers--that is, virtually all non-Macintosh PCs. Microsoft, Judge Jackson found, tried to control the "applications program interfaces," or APIs, which are the rules programmers follow to get necessary services from the computer's hardware or (most significant) from the Internet. Every program written to accomplish some real purpose--like balancing a checkbook or playing music or news from the World Wide Web--must communicate with the actual computer hardware and with the network beyond. For these purposes it uses someone's APIs. Microsoft tried to make sure that the only APIs available were those in Windows. Control of the APIs, Judge Jackson held, meant that Microsoft could indefinitely exclude any competing operating system, thus allowing Microsoft to charge higher prices than it would have been able to charge in a competitive market. To maintain control of APIs, Microsoft had to eliminate products, like Netscape's Internet browser, that threatened to take over some tasks performed by the operating system. The "browser wars," Judge Jackson determined, were part of a larger strategy by Microsoft to use its monopoly power to protect its monopoly position.
So this isn't a marginal case brought by a Justice Department antitrust division stretching to make new law. The facts Judge Jackson has found are central to the most straightforward purposes of the Sherman Antitrust Act: to prevent firms that acquire monopoly power from abusing that power to protect themselves against competition. Though he has not yet announced his conclusions of law, his findings of fact make it evident that Microsoft has violated our most basic antitrust law in the most serious ways possible.
Judge Jackson will spend several weeks polishing his legal conclusions, during which time the parties can attempt a settlement. But this they will do in private, and in the meantime public attention should be shifting to the question of remedy. Microsoft has been guilty of serious misdeeds against our competitive economic system; how shall we as a society respond?
Microsoft, the New York Times reported on November 7, has begun making heavy contributions to both political parties and hiring a stable of public commentators, including at least one law school dean. If true, these reports will shed light on much of the rhetoric you're about to hear in the remedy debate. "We must prevent," the hired talkers will say, "too much government interference with private business arrangements. Don't break up Microsoft, or other innovative corporations will be next." This is the same as saying that if you punish people who beat up old ladies for their Social Security checks, you will soon be jailing grocers. People who play by the rules don't get accidentally charged with antitrust violations on this scale.
But the hired talkers do have one point: We won't need drastic remedies to fix the Microsoft mess. Antitrust remedies don't have to be about punishing misbehaving competitors if there is a better way to restore competition. As Judge Jackson makes clear, the basic problem is that Microsoft hasn't had any viable competitor in the operating-systems business. But if he crafts the right remedy, it could have one very quickly: Linux. This free-software operating system, Judge Jackson recognizes, was built by tens of thousands of volunteers worldwide, has millions of users and runs sophisticated server computers at least as well as Windows NT.
To make Linux a full competitor with Windows would require small changes in Microsoft's rules for dispensing information about how others' programs use the Windows APIs. If those and similar legal and technical obstacles are removed, Linux-based systems would be able to run all programs written for Windows computers. Existing users could switch operating systems without changing the programs they use every day. As Judge Jackson found, there is no alternative competitor on the horizon anywhere close to achieving that level of compatibility with Windows.
Microsoft would then be competing on a level playing field with an organization of volunteers and commercial distributors who would have a higher-quality, completely compatible product everyone could get free. That's the kind of competition that would really benefit consumers. The end of the Microsoft Era can be the beginning of the Age of Open Software, in which programs will work better, cost less and develop in innovative new ways faster than ever before. That's the sort of outcome antitrust law is designed to achieve.