PublishedNovember 2, 2002

CCIA Statement on Microsoft Trial Ruling

Washington, DC – The decision by Judge Kollar-Kotelly to not overturn the flimsy and inadequate remedy, which a newly elected and politically beholden Justice Department reached with Microsoft, is very disappointing and yet not totally surprising.

Once the Justice Department, which started out as a diligent prosecutor of a lawbreaking monopolist, switched sides and became the virtual ally of the convicted monopolist, the dynamics of the case were transformed. The Judge, who missed hearing the trial evidence firsthand, decided to give great deference to the judgment of the Justice Department under the Tunney Act. That resulted in bestowing unwarranted credibility upon both Justice, and by association, Microsoft. The remedy therefore assumes a sincere change in behavior and attitude by Microsoft, but their actual current practices reveal a continuation of and expansion of monopoly abuse.

The clear record of this case, as well as the clear language of the Court of Appeals decision, justifies and indeed requires that a meaningful remedy be imposed. While the Judge appears in places within the decision to agree, she fails to follow through. In its unanimous ruling last year the Court of Appeals held that Microsoft had seriously violated antitrust law, and that the remedy must “terminate the monopoly, deny to Microsoft the fruits of its past statutory violations, and prevent any future anticompetitive activity.” By accepting such a deeply flawed settlement, the Judge concedes that competition will not be restored, that Microsoft can continue to reap the fruits of its illegal behavior, and that case will not impose any new limits on Microsoft’s freedom to commit illegal anticompetitive acts in the future.

This is only the end of a chapter for Microsoft, because the company has a “manifest destiny” vision, and their illegal behavior will not go unchallenged for long. Now that the monopolist’s ability to prevent new innovators or market forces from challenging it has been protected as a result of this decision, technology innovators and the public at large face a grave threat, for Microsoft is poised to monopolize the Internet itself. Their illegal conduct to achieve this goal will not cease until they are forced to stop.

Until this action is overturned on appeal or other intervening action is taken in other fora, competition in several important sectors of our economy will continue to be damaged, and in other sectors, the threat is now increased. In the United States the message is now clear, if you are a small innovator or even a large company, the Department of Justice will not protect you from predatory attacks by monopolists, especially if they have substantial political influence. We are pleased to note that in addition to several private suits that are underway, the European Commission is nearing a conclusion of its major case against Microsoft. Although focusing on a different set of Microsoft abuses in different markets and covering different time periods, the well documented and researched EU case may provide an example of quality anti-trust enforcement absent the constraints of the Tunney Act, campaign contributions and political interference.

This District Court decision represents a substantial nullification of antitrust law as it applies to one of our most important industries. Justice won throughout the trial, and then capitulated after a new team took over, leaving proven wrongs unremedied. For example, the Court of Appeals clearly prohibited Microsoft’s practice of commingling the code of Windows with that of other critical software when there is clear harm and no benefit to consumers. But there is no remedy in the settlement. This alone could be justification for reversal. We believe decision contains numerous errors of law, and reveals a staggering misunderstanding of technology and the way businesses interact in the software industry.

. The nine Attorneys General of the “stalwart states” are to be commended for their courageous defense of consumers, innovation, our free-market economy and our antitrust laws. These states proved that Microsoft’s monopoly is stronger than ever, and that effective remedies are needed.

Many Federal judges have already ruled against Microsoft, now one has ruled for it, we think this ruling is inconsistent and an aberration. We hope and expect that reconsideration of this decision will yield a better outcome.


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