Statement on Microsoft Settlement Decision by The Heartland Institute

November 05, 2002

CHICAGO, IL: On Friday, November 1, U.S. District Judge Colleen Kollar-Kotelly upheld the settlement between Microsoft, the U.S. Department of Justice, and nine state attorneys general of antitrust charges brought against Microsoft in 1998. It was, as Associated Press reported, “an enormous victory for Microsoft and founder Bill Gates.”

More importantly, it was a victory for consumers and the Rule of Law. Researchers at The Heartland Institute have contended since the beginning of the Microsoft trial that antitrust charges never should have been brought against the software manufacturer; there should not have been a guilty verdict in the trial that ended in 2000; and the settlement fully addresses the specific findings of the trial court, making additional penalties unnecessary and unjust.

The Heartland Institute has commented many times on the Microsoft case over the past five years. On January 10, 2002, in comments submitted to the Antitrust Division of the U.S. Department of Justice, Heartland President Joseph Bast wrote:

The proposed Final Judgment brings to an end, rightly so, litigation that has been rendered meaningless or counterproductive by changing market conditions. Since 1998, phenomenal increases have occurred in the power of computers, their ability to store information, and the speed of data transmission. Products that were once at the core of the Microsoft case have disappeared, changed dramatically, been superceded by others, or been sold or merged with others. The result is a product landscape that would be almost unrecognizable to a juror or jurist studying Microsoft in 1998.

Bast’s letter was one of only 47 of the more than 30,000 letters submitted to the Department of Justice considered “major” and forwarded to Judge Kollar-Kotelly, and one of only 5 such letters that favored the settlement. In his letter, Bast also wrote:

The practices that the trial court found to be anti-competitive are used routinely and legally by other companies in the IT industry and in other industries; it is dubious whether there can be an objective definition of what constitutes “anti-competitive practices” or under what conditions “competitive” conduct becomes “anti-competitive.” Microsoft’s practice of giving discounts to computer manufacturers who help develop new versions of Windows, include hardware to take full advantage of Windows, and promote the Windows name is a standard practice in other industries that works to the benefit of consumers.

The complete letter can be found at www.heartland.org/Article.cfm?artId=514. Other statements on the Microsoft case can also be found using the PolicyBot search engine on Heartland’s Web site at www.heartland.org.

In February 2001, Heartland published a book on the Microsoft case written by David B. Kopel titled Antitrust After Microsoft: The Obsolescence of Antitrust in the Digital Era. Kopel carefully worked through all the claims and myths surrounding Microsoft’s dominance in the Intel PC operating system market. He concluded there was more to fear from the misapplication of antitrust law than from a temporary monopoly in a rapidly changing marketplace for digital information services. According to Kopel,

The Microsoft case is not an isolated example of prosecutorial excess. It is the flgaship case of antitrust at the beginning of the twenty-first century. The Antitrust Division loudly promises the Microsoft case is the vanguard of many more information technology cases to come. If the Microsoft case is the best the Antitrust Division has to offer America, then there is nothing of value in the Sherman Act. It is time to repeal that remnant of a less enlightened and much slower-paced era.

Copies of Antitrust after Microsoft are available from The Heartland Institute and can be ordered from Heartland’s online store at www.heartland.org.

“Microsoft’s vindication in court is long overdue,” says Bast. “This decision tells companies in the information technology industry that it isn’t illegal to compete hard for market share and to win. One hopes it also sends a signal to Microsoft’s competitors that losers cannot expect the courts to reverse the verdict of millions of consumers freely choosing software.”


Editors: For further information, or to schedule an interview with Joseph Bast and David Kopel contact Heartland Public Affairs Director Greg Lackner at 312/377-4000, 773/489-6447, email lackner@heartland.org.