Final Microsoft Judgement and the Future of Anti-Trust Laws

POLUNIS:

You have a point, but Microsoft was only found to only have "limited liability."

And this is beyond considering the thorough thrashing Judge Jackson got from the appeals court over very serious violations of judicial ethics. I find it hard to consider his rulings "well-reasoned" in this case.

 

But I also want to turn a focus towards the FUTURE of anti-trust law. Clearly, there is a need to make some major reforms there. The Wall Street Journal reported that the departing head of the Anti-Trust division at DOJ has expressed a concern that anti-trust law is being perverted by companies who lobby the government to sink competitors who beat them in the market - this was in a speech at the ABA Antitrust Law Section's Fall Forum at the National Press Club Thursday and Friday.

I don't exactly find Charles James to be an unbiased person. He is leaving the DoJ to become the head counsel for ChevronTexico. They recently faced their own threats of antitrust action (over their merger). He has a vested interest now in weakening antitrust laws.

Additionally, you are taking his comments out of context. From the same article you gave, I quote:

James said some competitors and pundits created a political "spectacle" to push for greater restrictions on Microsoft, rather than relying on long-standing antitrust law and the facts of the case. (Emphasis added.)

Note that he did not say it needed to be reformed. He only complained about the impatience of competitors.

The department's antitrust division won't be responsible for overseeing a handful of additional restrictions that a federal judge added to her landmark antitrust ruling at the behest of some state attorneys general, U.S. antitrust chief Charles James said after a speech on Thursday. (Emphasis added.)

In other words, the items that the states asked for and got are their responsibility to enforce.

I'm of two minds on this comment. The ruling came from a federal judge, at the behest of the DoJ. How would you feel if a criminal was convicted of a crime and sentenced to house arrest or probation (for a longer term than the prosecutor asked for) and the police decided to let him off after a shorter period of time? It is not the DoJ's job to decide what to enforce. It is their job to enforce the law. All of it.

At the same time, I can understand the idea of "the states asked for it, so the states enforce it". However, it is a bad precedent to set that the DoJ will willfully ignore parts of a judges ruling, just becuase they don't agree with it. That's not their job.

Kimball Kinnison

 

This is why I own a Mac.

 

Kimball_Kinnison:

You would need to also have read the Wall Street Journal editorial from yesterday (I cannot link to it since they put that on the subscriber's edition of their website).

However, based on that editorial, and the article from Reuters. I'll save the thing and show you when I get a chance. The comments by Mr. James seem to indicate two things, though:

1. He felt this case was more about companies turning to the government to sink their competitors after they lose in the marketplace.

2. Microsoft was found guily of "only LIMITED liability" (emphasis added).

Furthermore, James also raised serious questions about states meddling in anti-trust law.

Quite frankly, anti-trust reform seems to be needed. I can see at least two areas up front, based on the comments Mr. James made:

1. Prevent states from interfering in these matters - the Commerce Clause, IMHO, precludes their involvement in interstate commerce. Time to expand that to include anti-trust law.

2. Eliminate to the greatest extent possible the ability of companies that lose in the marketplace to get the government to sink their competitor.

 

The reason I thought his judgments as a whole were well-reasoned was due to the nature of the case. I agree that Microsoft is a monopoly that exploits its position much to the detriment of any competitor or potential threat to their hegemony. It is simply not in the best interest of anyone other than M$ to have them in control of the industry.

I do concede, however, that there have been some inroads made regarding the distribution of PCs preloaded with Linux. Walmart.com sells LindowsOS PCs for $199. BeOS, IMHO, did have a legitimate case against M$.

I think M$ exercised very poor judgment regarding the further entangling of IE into the OS. I have found especially the 9x line of OSs to be particularly susceptible to IE's whims. Blue screens of death, anyone?

In brief, I think everyone would be better served by a healthy competition to M$; I am looking forward to innovation and I do not see M$ providing that.

I found Jackson's ruling came up short when he advocated splitting up the company. That was simply not feasible. Besides, I do not think that would make a dent in M$'s illegal activities. I am not arguing about the prudence of anti-trust legislation but about the fact it is law.

BTW, could you outline exactly what was improper about either Judge Jackson or his ruling? I do not recall you posting that earlier.

How do I think anti-trust law could improve? I think it might need to be more narrowly-defined, but that could court problems of its own. You are probably aware of the fact that when one attempts to define too strictly, then loopholes are bound to spring up all over the place

 

You would need to also have read the Wall Street Journal editorial from yesterday (I cannot link to it since they put that on the subscriber's edition of their website).

Bro, may I remind you of something? Take a look at the definition of the word editorial. It is "[a]n article in a publication expressing the opinion of its editors or publishers" (emphasis added). All the Wall Street Journal editorial shows is that there is someone who happens to publish a newspaper who agrees with you, nothing more.

As I pointed out to you, when you look at James' comments in context, he was expressing that the DoJ would not enforce the arts the states asked for. That is a complete derelection of duty. It is not his job to interpret or approve of the law or the settlement. It is his job to enforce it.

As a counter example, look at the Beltway Snipers. Last I checked, they were going to be tried in Virginia for the crimes committed in Maryland, DC and Virginia. Now, let's assume that Virginia decides to only ask for 20 years while Maryland wants them to get life (I know, not likely, but play along for a moment). If the judge came back and ordered 30 years, how would you react to Virginia deciding to release them after only 20 years (after all, that's all they wanted, right?)? You would be up in arms.

The DoJ's job is to enforce the law, even those that its administration is not in favor of. To do any less than that is a travesty.

1. Prevent states from interfering in these matters - the Commerce Clause, IMHO, precludes their involvement in interstate commerce. Time to expand that to include anti-trust law.

By that same argument, the US should not be able to do anything to Elcomsoft because they are based in Russia. Since they aren't a US company, they don't have to obey US rules, right?

Wrong. The Commerce Clause prohibits a state from interfereing with interstate commerce. For example, back when we lived in Hawaii, they tried to tax all milk that came in from the mainland. That tax (specifically on products coming from outside the state) was unconstitutional.

However, if a business wishes to do business within a state, they need to obey the laws in that state. That is why (for example) companies in New York have to worry about California's trade secret laws. The Commerce Clause only applies to interstate commerce. As long as a state's laws do not discriminate against "imported" products (from other states), there is no conflict with the Constitution.

2. Eliminate to the greatest extent possible the ability of companies that lose in the marketplace to get the government to sink their competitor.

I'll agree with this when companies that illegally use their monopoly position in one market to "cut off [the] air supply"* of a competitor who has gained dominance in a new market. When a bully invades the playground, it is time to go get the adults.

Kimball Kinnison

*Quote from a Microsoft internal memo (written by Paul Maritz, Platforms and Applications Group VP) about how to deal with the threat from Netscape.

 

POLUNIS:

The major issue I had with Thomas Penfield Jackson was his conduct.

The sppeals court thoroughly eviscerated him over that in their opinion - and quite frankly, his conduct - particularly EMBARGOING the interviews, lead me to serious question whether the entire judgement was fairly reached and rendered.

Kimball_Kinnison:

Some direct quotes you may want to look over:

"This is not the system we would design today if we were starting all over again."

and

"Microsoft is a portent of what the future could be like if major antitrust suits become just another Washington power grab, like a piece of legislation."

Charles A. James
Source:
http://seattletimes.nwsource.com/html/businesstechnology/134571935_james08.html

 

Bro, as I pointed out, though, Charles James is in the process of leaving the DoJ to go to work for another company that has undergone intense antitrust scrutiny lately. Wouldn't you consider it to be a little of a conflict of interest for him to be calling for reforms that could only help him in his new job, just as he is leaving office?

I notice that you have not responded to his derelction of duty in deciding not to enforce the entire settlement. What are your comments on that?

Kimball Kinnison

 

Bro, I think James is not derelictin his duties. He believes he LACKS the legal authority to do so (as the Seattle Times article states).

Now, if he is mistaken, it is up to Judge Koller-Kotelly to inform him of that. But if he says he lacks the legal authority, for him to carry out the provisions the states demanded would be usurping authority, which is just as bad.

 

I find it fascinating that you can so selectively read your own links, bro. Quoting from the Seattle Times article:

James' remarks drew some criticism. "What a narrow view to take," said Eleanor Fox, who teaches antitrust at New York University law school. "If I were a state enforcer I would be pretty mad."

Even without technical authority to enforce the restrictions won by the states, she said, James or his successor "certainly has the authority to have that on his checklist and do surveillance and let Microsoft know when the Justice Department thinks they are falling short of that obligation."

Note that James is taking a very narrow view of antitrust. Remember that although they prosecuted the case together, the Federal and State cases had separate (but identical) rulings. It is the DoJ's duty to uphold the federal ruling.

The states' role "is more a product of historical accident than a conscious effort to make antitrust enforcement effective in today's national and global marketplaces," James said in his speech. "This is not the system we would design today if we were starting all over again."

As you can see here, you quoted James out of context. He was not saying that all of antitrust needed to be overhauled, only that it is the product of "historical accident".

And remember, just because he says he lacks authority, doesn't mean that he does. As I've pointed out, he has a personal, vested interest in weaker antitrust enforcement, considering his new job. Why would you then consider him an unbiased source for information?

Kimball Kinnison

 

Bro, if the head of the IRS were leaving to head H&R Block, and he said in a forum that some of the tax laws were clearly counterproductive and needed to be fixed - which Mr. James seems to be clearly saying in this case regarding anti-trust law - wouldn't you take that as a sign that reforms are needed?

 

Microsoft released their SEC filings yesterday. Something very interesting to notice:

They are losing money on everything except Windows and Office, where they are achieveing record income. For example:

Windows (client-side): $2.48 billion income on $2.89 billion revenue
Windows (server-side): $519 million income on $1.52 billion revenue
Office: $1.88 billion income on $2.39 billion revenue

Compare that with these:
MSN: $97 million loss on $531 million revenue
Windows CE: $33 million loss on $17 million revenue (this would cause any other business to cancel the program)
Xbox: $177 million loss on $505 million revenue

Remember that Microsoft also has in excess of $40 billion cash sitting in the bank and they do not give dividends to their shareholders. If any other business were to have divisions resulting in such losses, its stockholders would be up in arms and demand that they either sell or shut down those divisions.

The only areas where Microsoft is showing a clear profit are the areas where they used anticompetitive practices to build and maintain their monopoly. In other markets where there is significant competition, they are being crushed. [sarcasm]I wonder why that is?[/sarcasm] (Xbox continues to be outsold by the PS2, a machine that is over a year older than the Xbox. MSN continues to have fewer members than AOL, even counting the paid Hotmail accounts who do not receive internet access. PalmOS handhelds continue to outsell PocketPCs.)

Kimball Kinnison

P.S. Since it's pretty much been my brother and myself discussing this, if he is the only one to respond, I'll continue the discussion with him offline. I would really prefer to have other input as well.

 

Ha! And I was about to butt in and say 'Why are you two using 'bro'? Is that a sign of condescension?'

That's the most civil intellectual family squabble I've ever seen...

 

Red-Seven,

That's why I always add a "Full Disclosure" statement to my first post in each thread after my brother posts in that thread. I guess you should have read from the beginning

Kimball Kinnison