The Roots of the Microsoft Antitrust Case: An Analysis of Judge Jackson’s Finding of Fictions – Part 2

by | Feb 21, 2000

Microsoft’s achievements should be held up as a model of how to create and maintain a highly productive, innovative company. Yet Judge Jackson is unable to view any of these facts in a positive light. While Judge Jackson recognizes many of the concrete facts that demonstrate Microsoft’s productive achievement, he is incapable of praising the […]

Microsoft’s achievements should be held up as a model of how to create and maintain a highly productive, innovative company. Yet Judge Jackson is unable to view any of these facts in a positive light. While Judge Jackson recognizes many of the concrete facts that demonstrate Microsoft’s productive achievement, he is incapable of praising the innovation and business acumen that led to Microsoft’s success.

Instead, his descriptions are clouded by slanted, inflammatory terms that attribute vicious motives to Gates and his company. When Microsoft created new technology to compete with its rivals, Judge Jackson describes the company’s motivation as “fear” and “alarm.” When Microsoft offered incentives to its business partners, Judge Jackson decries this as the “quashing” and “stifling” of rivals. When Microsoft licensed its products only under conditions favorable to its long-term success, Judge Jackson describes these actions as “threats” and “force.” (Judge Jackson uses variations of “threat” no fewer than twenty times and of “force” no fewer than sixteen times to describe Microsoft’s actions.) When Microsoft refused to support its competition, Judge Jackson calls this “punishment.” When Microsoft ingeniously melded technological and business strategies to convince consumers that its products were the best, Judge Jackson sees the company as “seizing control” and trying to “capture” the market.

Even worse than his slanted terminology are his substantive arguments, in which he sets up impossible standards according to which no successful business could escape prosecution. For example, Judge Jackson writes early in his ruling that:

It is not possible with the available data to determine with any level of confidence whether the price that a profit-maximizing firm with monopoly power would charge for Windows 98 comports with the price that Microsoft actually charges. Even if it could be determined that Microsoft charges less than the profit-maximizing monopoly price, though, that would not be probative of a lack of monopoly power, for Microsoft could be charging what seems like a low short-term price in order to maximize its profits in the future for reasons unrelated to underselling any incipient competitors. (Paragraph 65) (Emphasis added.)

Judge Jackson admits that it is not possible to tell whether Microsoft is in fact charging a monopoly price. Yet he dismisses this lack of evidence as irrelevant because Microsoft could simply be using low prices today in order to “capture” the market and charge exorbitant prices at some future date. In other words, Microsoft is a monopolist if it charges prices that are deemed “too high”–but it is also a monopolist if it charges prices that are too low. By virtue of its dominant position in the industry–that is, by virtue of its success–Microsoft is damned if it does and damned if it doesn’t.

Judge Jackson’s visceral antagonism to business is also revealed by his condemnation of Microsoft for winning the browser battle against Netscape when “superior quality was not responsible for the dramatic rise [in] Internet Explorer’s usage share.” (Paragraph 375) Note the implicit premise in this condemnation: If Microsoft hasn’t produced a product that is technologically superior, then only commerce can explain its success. Jackson is repulsed by the notion that successful computer companies require both technological savvy and business skills; in his ideal world, Silicon Valley would be populated solely by computer scientists with nary an “alarming” venture capitalist or “threatening” businessman in sight.

References:

[i] Bill Gates, The Road Ahead 64 (1995)
[ii] US v. Microsoft, No. 98-1233 (TPJ) (D.D.C. Nov. 5, 1999) (findings of fact). All references to the findings of fact hereafter will refer only to the paragraph number.
[iii] United States v. Trans-Missouri Freight Association, 166 US 290, 324 (1897), emphasis added.
[iv] Albrecht v. Herald Co., 390 US 145, 153 (1968).
[v] Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370, 377 (7th Cir. 1986), citing Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 US 585 (1985) (holding that a monopolist has a duty to help a competitor).
[vi] US v. Aluminum Co. of America, 148 F.2d 416, 431 (2d Cir. 1945).
[vii] “Statement by Bill Gates on the Findings of Fact,” www.microsoft.com/presspass/ofnote/11-09wsj.asp, visited Nov. 11, 1999.
Mr. Mossoff is a professor of law at Antonin Scalia Law School at George Mason University. He is a Visiting Intellectual Property Fellow in the Edwin Meese III Center for Legal and Judicial Studies at The Heritage Foundation, a Professor of Law at the Antonin Scalia Law School of George Mason University, and a Senior Fellow at the Hudson Institute. His scholarship has been relied on by the Supreme Court, by federal courts, and by federal agencies, and he has been invited numerous times to testify before the Senate and the House of Representatives on proposed intellectual property legislation. Visit his website at adammossoff.com.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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