Microsoft Ends 9-Year Fight

Is U.S. Business Overregulated?It was no great surprise that Microsoft recently agreed to end its 9-year fight against the European Union’s antitrust regulators; see The New York Times, Oct. 23, 2007, 1st business page. The company simply got tired of fighting a system that claims to support competition without consideration for the realities of the marketplace. Will freer competition and better customer service result? There may be little actually gained because of previous Microsoft agreements with other computer companies for cross-licensing and the sharing of technology.

 

The U.S. version of the case began in 1998 and ended with relatively minor penalties assessed against Microsoft in 2002. Our government had alleged that Microsoft illegally tied its Web browser to the Windows operating system despite the fact that injury to consumers was never proven. The Microsoft case illustrates the challenges facing 21st century courts attempting to reconcile innovation, the financial requirements of an industry heavily invested in research and development, and antitrust law that was enacted more than 115 years ago. At the time of the first law protecting competition – the Sherman Act of 1890 – America was evolving from agriculture to manufacturing, and there was limited foreign competition.

 

The concept of antitrust made sense when consumers had no choice in their sources of supply as small businessmen and farmers discovered in the late 19th century. That situation has clearly changed, and America is now scrambling to compete in global markets with international competitors from China, India and other fast growing economies who are not looking over their shoulders at antitrust regulators. Numerous legal cases have similar histories to Microsoft as the judicial process slowly wends its way through fact finding, analysis, discovery, motions, and trials. Markets move faster than antitrust, and a shrewd litigation team can drag out the process for a much longer time than the life or death of a competitor.

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