No Slap on the Wrist

Although it still claims its innocence on antitrust charges, the software giant Microsoft on May 10 presented Judge Thomas Penfield Jackson with an alternative remedy to counter the government's proposed breakup. Unsurprisingly, the company's solution placed unacceptably weak restrictions on Microsoft's future conduct and left open a number of loopholes that are likely to be closed by the government's plan. A remedy as narrow as Microsoft's will not do enough to dissuade the company from continuing its abuse of monopoly power--a stronger resolution to the case must be employed.

Microsoft's proposal would prevent only some of the misconduct in which the company has been shown to have engaged. Most of the proposal deals with Microsoft's Internet Explorer software, which was at the center of the antitrust case. However, Microsoft has been found guilty of using its monopoly power in a wide range of areas, browsing being only the most prominent. Only three elements of Microsoft's proposal would restrict the company's actions in general ways: Microsoft would offer other software vendors timely access to technical information, would not withhold already-written software for other operating systems in order to gain additional concessions and would continue to sell old versions of Windows after new features are introduced.

However, these restrictions would not, for instance, require Microsoft to publish the prices at which it licenses Windows, preventing it from coercing computer vendors with higher prices; they would not stop it from requiring vendors to include other Microsoft products with Windows; and most importantly, they would not separate the financial interests of the applications and operating systems divisions of the company. Given the danger that Microsoft could evade, through legal wordplay or technological change, the content of conduct remedies, the latter seems necessary to prevent future abuse. The government's plan, which incorporates these elements, is a more sound starting point for restoring competition--and spurring innovation--in the software industry.