February 21, 1995
Microsoft and the Courts
[INTRO: One week ago, in Washington, U.S. District Court judge Stanley Sporkin threw out a "consent decree" negotiated between the U.S. Justice Department and the Microsoft corporation, the world's biggest software producer. Under the agreement, Microsoft said it would change certain business practices the government called monopolistic, and the Justice Department said it would drop its anti-trust case against the company. In rejecting this agreement, Judge Sporkin said, in effect, that the Justice Department had been too easy on Microsoft and would have to come back with harsher terms. Now Microsoft and the Justice Department, the two original antagonists in the case, are jointly appealing Sporkin's ruling. Commentator James Fallows says that this convoluted legal battle will have more impact on America's future than the more famous courtroom showdowns now going on.]
There is constitutional drama in this case, involving something called the Tunney Act. This act lets judges review the details of anti-trust settlements and reject those that seem like sweetheart deals. Judge Sporkin relied on this act when saying that the Justice Department should have accused Microsoft of even more anti-trust violations than it did. Now, on appeal, the Justice Department will presumably argue that the Constitutional principle of "separation of powers" forbids judges to tell prosecutors whom they should charge with what crimes.
Most of the computer industry, however, is saying 'Constitution, Shmonstitution.' Instead they're wondering whether this ruling will remake their business, as telecommunications has been remade by the breakup, under the Tunney Act, of AT&T.
Judge Sporkin's written opinion vividly conveyed the fears of Microsoft's critics. The judge pointed out that the company has unprecedented depth and range of influence. Its operating systems, DOS and Windows, are in effect monopolies. Its on line Microsoft Network, set to debut this year, will be an immediate threat to services like America OnLine and Prodigy. Microsoft's pending acquisition of Intuit, which makes financial programs, is seen as a step toward a major role in managing electronic commerce.
Yet despite its vast power, the judge said, the company retained the mentality of a shoestring operation that could not afford to give any competitor any slack. Here's one personal example. My computer uses one of the few operating systems not made by Microsoft - "OS/2 Warp," from IBM. When I load certain software from Microsoft, it quickly detects the presence of my "alien" operating system, flashes a warning about unspecified problems this might cause, and asks permission to erase the non-Microsoft files from my machine. This is not illegal but, like hundreds of similar episodes recounted in the industry, it suggests an expansive aggressiveness that, among big companies, seems unique to Microsoft. Microsoft's response is that it's just trying to sell its products and is not breaking any rules.
Judge Sporkin presented his opinion as an attempt to recast the rules to fit new technical and competitive realities, as previous trust-busters have done. By the time this case is resolved, we'll know whether the world's software giant will survive intact or whether the landscape will be cleared for whole new forms of competition. Either way we will live with the legacy of Stanley Sporkin and the Tunney Act long after we've forgotten just who Marcia Clark and Johnnie Cochran were.
Copyright © 1995, by James Fallows. All Rights Reserved.