Is Antitrust Obsolete?

Published March 6, 2001

CHICAGO, IL March 6, 2001: The antitrust lawsuit pending against Microsoft, decided against Microsoft last year and now in oral arguments before the U.S. Court of Appeals for the D.C. Circuit, “marks the end of an era of antitrust law theory, legislation, and action,” writes attorney David B. Kopel in a new book released by The Heartland Institute, a Chicago-based think tank.

“Regardless of which side wins,” writes Kopel, “antitrust policy in the twenty-first century will be far different” from what it was in the past. Kopel uses a careful analysis of the antitrust lawsuit, U.S. v. Microsoft Corporation, to raise and answer questions about the viability of antitrust regulations in an era of rapid technological change.

According to Kopel, the Microsoft case and the history of antitrust enforcement reveal the inability of government to either identify or to act against companies that attempt to extract monopoly profits by predatory practices or using market power. Government regulators must often proceed slowly to allow political oversight of their actions, and such delays allow technology to sweep away products, create new competitors, and fundamentally alter competitive balances long before judgments are reached.

The vagueness of antitrust law makes it particularly hazardous for the information technology industry, where aggressive competition, strategic partnerships, and cutting prices to achieve market share are standard business practices. Microsoft, Kopel argues, is being tried for using aggressive competitive tactics that are commonplace in the software industry and legal when used by companies that haven’t been “marked with the scarlet ‘M’ for monopoly.”

Kopel reviews the origins of antitrust law, finding it was rooted in concern over falling prices due to technological advances and economies of scale, and not concern for consumers victimized by monopoly pricing. He sees a parallel in the Microsoft case, where prosecutors failed to establish any consumer harm or even to produce a single consumer “victim.”

Kopel contends that Microsoft was targeted for antitrust prosecution because it refused to hire lobbyists and make political contributions to “buy protection.” Ambitious prosecutors and politicians have used obsolete antitrust laws to demonize the company. “Open-ended laws allowing unpopular people and industries to be prosecuted on vague and shifting grounds are an invitation to abuse, especially during periods of destabilizing change. Anti-trust statutes, like anti-witch statutes, are archaic relics of fear. Neither has a place in the digital era.”

About the Author

David B. Kopel joined The Heartland Institute as director of the Center on the Digital Economy in May 1999. He is also an Adjunct Professor of Law at New York University School of Law and Research Director for the Golden, Colorado-based Independence Institute. He graduated magna cum laude from the University of Michigan Law School.

About the Publisher

The Heartland Institute is a nonprofit, nonpartisan research organization based in Chicago, Illinois, and founded in 1984. It publishes books, policy studies, three monthly newspapers, and a bimonthly magazine. Funding is provided by approximately 1,000 individuals, foundations, and corporations. Heartland is tax exempt under Section 501(c)3 of the Internal Revenue Code.

Antitrust after Microsoft
by David B. Kopel
Publication Date: March 2001
Price: $8.95 paperback, Pages: 176
ISBN: 0-9632027-5-8