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Government Retreat Will Take a Toll on Competition
Published on Thursday, September 6, 2001 in SiliconValley.com
Microsoft Decision
Government Retreat Will Take a Toll on Competition
by Dan Gillmor
 
Competition got hammered Thursday, and all the spin in the world won't change that fact.

The Justice Department and state attorneys general insist that their actions -- to abandon a breakup of Microsoft and give up on a key legal question -- are sound strategic maneuvers. Maybe they even believe what they're saying.

Some will charge that money bought this new position. I doubt campaign contributions -- the legal bribery that fuels government today -- were the direct cause.

For the Bush administration, which has a consistent record of favoring the interests of big business, this was a no-brainer. The only surprise was the charade we'd been seeing from the Bush Justice Department in this matter. Now we know what we suspected. It was a pretense.

The real surprise, and disappointment, was the states' willingness to go along with this sellout. My guess is that the attorneys general have grown weary of the battle. They've fallen victim to Microsoft's ability and willingness to outlast and outspend any opponent.

The case for splitting up this unrepentant monopolist has only grown stronger since the trial, not weaker. Microsoft has been spitting on the legal system and, with Windows XP and other initiatives, maneuvering without any subtlety to extend its monopoly into new arenas.

Giving up on the ``tying'' claim didn't help, either. It tells the world that Microsoft had a right to bolt the Internet Explorer Web browser to the Windows operating system even though the primary purpose was to kill competition.

The government retreated without even a hint of a concession from the most arrogant monopolist since Standard Oil. In the process, the Justice Department and its state-government go-alongs have left themselves no serious leverage in the supposed negotiations for a settlement.

They seem to think they can move the case along more quickly now, and get serious remedies affecting Microsoft's conduct. What are they smoking? Haven't they noticed that Microsoft doesn't believe in anything but a legal scorched-earth strategy? Haven't they observed Microsoft's ability to string the case out endlessly, until remedies for yesterday's conduct are meaningless in today's -- and tomorrow's -- reality?

Microsoft has shown it will not agree to any remedies that mean actual change in conduct or any remedies that risk the monopoly and its extension. It has shown it will violate the spirit of any agreement it makes if that suits the corporate objectives.

The Justice Department claims it doesn't want remedies that require endless government intervention in the inner workings of technology development. If the government pursues the case in the way it now says it will go, such intervention will be unavoidable.

A breakup -- a so-called structural remedy -- would have been a relatively clean solution. Conduct remedies, if adopted, will amount to a new federal Department of Software Design.

The spin will continue, but the reality is simple. The people whose job is to protect competitive markets have given ground on fundamental principles. They're looking for an easy way out. There isn't one.

© 2001 KnightRidder.com

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