The recent “findings of fact” and ruling by Judge Thomas Penfield Jackson that Microsoft violated antitrust laws is a travesty of economic reasoning and common sense justice.
Jackson accepted the bulk of the government’s argument that Microsoft was a monopoly in the relevant market and that they engaged in “anti-competitive” practices to enhance their monopolistic position. Microsoft has vowed to appeal the verdict in order to protect their right to freely price and innovate within the Windows platform.
Judge Jackson’s reasoning is fatally flawed. First, Microsoft has only a dominant position in a narrowly defined relevant market; they have no meaningful monopoly and no output restricting monopoly power. There are competitive operating systems available, competing systems to find and navigate the WEB, and no legal restrictions on entry anywhere in cyberspace.
Second, to be “competitive” means to offer consumer-buyers enhanced value, and when Microsoft integrated their browser into Windows (to better compete with then market leader Netscape) it emphatically enhanced consumer value. That Netscape lost revenue (but not their entire market or their access to consumer PCs) is explicit evidence that Microsoft’s integration did enhance consumer value and was competitive.
Monopolies restrict market output and raise prices but, instead, Microsoft improved the browser experience and made it available to PC users at no cost. Judge Jackson, with the very worst academic advise, has taken explicit evidence of open market competition and twisted it 180 degrees to find “monopolization “ and a violation of law.
Judge Jackson’s decison will create a feeding frenzy of treble damage suits by competitors and customers who will claim that they were injured by the illegal monopolization.
It will also cast a political and regulatory shadow over the future of innovation and dominant firm market share in high-tech industries.
The only good news is that the decision will deliver a blow, hopefully fatal, to those critics of antitrust who thought that antitrust regulation had been “reformed.” The reform agenda was always politically naive in the extreme.
Antitrust is now clearly revealed to be politically driven vampire that defies any reform. We must drive a stake through its heart and repeal it before it does even more economic mischief.
