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Jewish World Review Nov. 15, 1999 /6 Kislev, 5760

Paul Greenberg

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Econophone

Macrothoughts about Microsoft

http://www.jewishworldreview.com -- LET'S CLEAR THE SCREEN and call up a few macrothoughts about The Hon. Thomas Penfield Jackson's findings of fact (and almost law) in the U.S. vs. Microsoft case. Among them:



-- The law retains its power to clarify. As soon as Judge Jackson's finding came down, the whole tenor of this debate changed. Microsoft's chief operating guru, Bill Gates, was talking about a fair and reasonable settlement, rather than claiming there was nothing to settle. Has any finding of fact ever come so close to a finding of law?

-- The basic question in all anti-trust law -- efficiency vs. competition -- has been settled, at least for now, and at least in theory, in favor of competition. Microsoft made a powerful argument in favor of efficiency, just as Standard Oil and American Tobacco once did -- in vain. Not even government-organized monopolies, like the New Deal's NRA and the AAA, were upheld when challenged in court. Monopolies are indeed efficient, at least in the short run; but given free rein, they tend to grow inefficient in the long. See the U.S. Postal Service.

-- Microsoft's pre-eminence (its critics would say predominance) might provide efficiency for the foreseeable future, which these days lasts about 30 seconds. Opening the doors, or windows, to competition might prove more efficient in the future, which is right now. John D. Rockefeller claimed that he was only trying to rationalize the oil industry, too. But breaking up his monopoly, while disruptive at first, would seem to have proved the more reasonable course. (Bill Gates might disagree, or make a distinction between his operating systems and John D.'s railroad rebates, but the analogy, like all analogies, is useful -- if only to provoke thought.)

-- How quickly change is absorbed in the American culture. People are already becoming accustomed to the idea of baby Microsofts the way they did baby Bells after AT&T ran afoul of the anti-trust laws. Or maybe Microsoft's Windows will become everybody's Windows. Whatever. We'll adjust and so will Bill Gates. After all, he didn't found Microsoft to fight change; he's been in the middle of it ever since, and this is just another change, however basic. Change is the air Americans breathe.

-- Once upon a time, tycoons dealt with politicians as equals. Or as J.P. Morgan, who had bailed out the Cleveland administration at a critical point, told Teddy Roosevelt at another: "Why don't I just send my man to see your man?'' The quote may be inexact, but the message was clear: We can settle the economy's problems between us. Now both nabobs and presidents must appeal to the ultimate sovereign, public opinion. Bill Gates learned the lesson too late. But he caught on big time: Microsoft and its execs made $1.3 million in political contributions last year. The company also spent $3.7 million on spin doctors and rented an army of lobbyists to win friends, influence people and, above all, save marketshare.

But the court was unimpressed. Here the law still rules, which is assuring.

-- The more revolutionary people say the Internet is, the more familiar it seems. Power, whether political or economic, increases till it runs up against the public will, often enough expressed in a court of law. Ingenuity can create a monopoly, but not keep it. It's a familiar phenomenon, as old and as new as Henry Ford and Bill Gates, John D. Rockefeller and J.P. Morgan. Our tycoons change the way we do things so dramatically that eventually, collectively, through government or competition or greater ingenuity, we change the way they do things.

-- Whether this latest decision opens new possibilities or closes down old ones, and surely it will do both, is still being debated, and doubtless will be debated indefinitely. History is an open-ended game, or at lest revising it is. Some folks are still arguing over whether the break-up of AT&T, or Standard Oil, was a good thing. Law may not move as fast as information in this Webbed society, but it can be just as confusing, frustrating and enlightening.

-- Anti-trust law is less a collection of Thou Shalts and Thou Shalt Nots than an economic theory, or maybe just an economic preference, embedded in the statute books. And probably in the American soul. There is something in an American that will not tolerate a restraint of trade, whatever that is. Critics of this judge say his findings of "fact'' can only be speculation, but they forget that anti-trust theory is a bit like baseball: It is the possibilities that open with every pitch that make the game so fascinating. The smallest move, as in chess, can lead to a wholly different outcome. In some enterprises, like anti-trust law, speculation isn't just an adjunct, but the essence of the game. It's what breeds change, invention and new applications in place of old habits.

You would think anybody in software would understand.

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