Ease Up on the Evil Empire

spunkanado (tomwhore@interport.net)
Wed, 30 Jul 1997 13:35:07 -0400 (EDT)

FTC won't probe Microsoft
By Alex Lash
July 29, 1997, 6:40 p.m. PT

The Federal Trade Commission has officially rejected three senators'
request to reopen an investigation of Microsoft's
alleged antitrust practices, according to a letter sent to the congressmen
by the FTC chairman.

The rejection, sent yesterday by chairman Robert Pitofsky, came in
response to a group of senators who felt the Justice Department's ongoing
antitrust investigation was proceeding too slowly.

The official FTC decision leaves one fewer avenue of redress for those who
contend that Microsoft uses its domination of the desktop to gain market
advantage for its own software products, including browsers and
productivity applications. In addition to the Justice probe, at least two
state attorneys general are looking into antitrust complaints levied
against the software giant, which is currently embroiled in a civil suit
with software maker Caldera.

The senators were acting upon allegations that Microsoft was not abiding
by the 1994 consent decree that forbade it from using its Windows
operating system to leverage the shipment of other Microsoft software.
Microsoft officials denied any such breach.

At the time of the senators' request last month, FTC officials made it
clear that the commission would not pursue an antitrust investigation that
overlapped a Justice investigation. The FTC has not precluded picking up
the investigation if Justice drops it, but such a scenario seems uncertain
at best, given that Justice picked up the investigation from the FTC in
the first place.

Whatever the outcome of the Justice investigation, Microsoft opponents
always have the option, however daunting, of bringing a civil lawsuit, as
Caldera has done.

Caldera brought its suit against Microsoft in 1996, shortly after it
acquired Novell's DR-DOS operating system. The suit alleges that Microsoft
engaged in anticompetitive tactics. The case isn't likely to go to trial
before 1998.

If civil litigation were successful, however, it could benefit Microsoft's
competitors without addressing the underlying unfairness.

"If competitors file and win a lawsuit, the competitors get
compensation--but not the consumers," said Gary Reback, a partner at
Silicon Valley law firm Wilson, Sonsini, Goodrich & Rosati who has
represented Microsoft rival Netscape Communications. "But the chief
benefit of a government suit is to provide for structural relief."
Meanwhile, Microsoft officials have dismissed attempts to re-involve the

FTC as desperate moves by competitors seeking to hamstring Microsoft in
any possible way. Audrie Krause, executive director of consumer interest
group NetAction, disagreed and stressed that the average consumer has a
stake in breaking up monopolies.

"In a competitive market where consumers have choices, competitors have
the incentive to keep improving their products and lowering prices,"
Krause said. "Some competitors lose [in this situation], but the point of
the laws is to protect competition, not competitors, and that benefits

Representatives of the senators who requested the FTC
investigation--Conrad Burns (R-Montana), Craig Thomas (R-Wyoming), and Ted
Stevens (R-Alaska)--were not immediately available for comment.

"If Justice pursues something and gets a party to admit it's guilty, that
obviously helps a civil action," said Marilyn Tham, an associate at
Cotchett & Pitre, a Burlingame, California, law firm that specializes in
antitrust matters. "If the investigation terminates, you don't have the
same kind of ammunition, but it wouldn't preclude a civil action from

NetAction's Krause was frustrated but not surprised by the FTC's decision.
"It wasn't unexpected," said Krause. "We tried to encourage them to take a
look at Microsoft from a consumer perspective, but it was like hitting our
heads against brick wall. They were convinced that Justice was doing just

To press her case further, Krause is organizing a day of meetings with
Congressional staff on September 15 in Washington, D.C.