CCIA’s AMICUS FILING CONCLUDES JUSTICE REMEDY CLOSE TO THE MARK

BY CCIA Staff
May 23, 2000

Washington, DC- The Computer & Communications Industry Association (CCIA), in an amicus brief filed in the U.S District Court for the District of Columbia in connection with U.S. v. Microsoft, demonstrates industry’s strong support for a divestiture remedy very similar to that recommended by the Justice Department and the 19 States involved in the case. Joining with CCIA in the filing was the Software and Information Industry Association (SIIA). Together they represent both the breadth and depth of the technology, communications and software industry, which has been so critical to our dynamic, innovative and thriving economy.

Ed Black, President & CEO of CCIA said “The vast number of leaders in our industry have long understood that the entrenched nature of the Microsoft monopoly combined with the totally unrepentant attitude and behavior of its senior executive team would make conduct remedies extraordinarily difficult, if not impossible, to enforce.

“Microsoft continues to argue that its [illegal] means of doing business should be tolerated, because the end result is the company makes improvements in the world of computers and software. As we in the industry know, the accomplishments of our industry are the result of the contributions of thousands of individuals and companies competing and innovating, and Microsoft’s role in developing new technology has been limited and mixed. In this case it has been proven that better ends [greater innovation and choice] will result if we can stop the monopolist from using [illegal and abusive] monopolist means.”

Amicus Specifics:

A structural remedy is needed because behavioral remedies do not address the two principal competitive problems demonstrated by the trial evidence and subsequent events: (1) Microsoft’s monopoly power in operating systems, which provides multifaceted opportunities for abusive, coercive conduct that excludes competition, and (2) Microsoft’s successful leveraging of that monopoly into a monopoly in the Internet browser.

Antitrust remedies must restore competition, neutralize a monopoly that has been abused, deprive a violator of the benefits of its illegal conduct, and prevent a recurrence of anticompetitive activity. Where the antitrust violation involves monopoly, and there is a continuing incentive and ability to abuse that monopoly, only a structural remedy can satisfy these criteria.

The reorganization of Microsoft into separate operating systems and applications businesses takes away the operating system’s control over the most significant aspects of the applications barrier to entry – including control over the Internet browser achieved by Microsoft’s illegal conduct proved at trial. Although the operating systems company will remain a monopoly immediately after the reorganization, it will face the Office and Internet Explorer monopolies as competitive threats rather than reinforcements of its power. Each of the companies to be formed in the reorganization will have incentives to undermine the other’s monopoly control, whether by entering the other’s market, by ensuring interoperability with the other’s rivals, or merely by cooperating in the development of cross-platform middleware aimed at the other’s platform.

The proposed conduct provisions … are appropriate interim measures to prevent Microsoft from engaging in anticompetitive behavior similar to that proved in this case, without impinging on the development of software. Given Microsoft’s track record, such restraints are needed until the reorganized, independent successor companies establish a competitive dynamic.

Before judgment is entered, Microsoft may be afforded an opportunity to cross-examine the plaintiffs’ witnesses promptly, but should not receive additional discovery. Microsoft knows its own organizational structure and its own illegal practices. It should not be permitted to use the judicial process to seek out and intimidate those who provided information to the government, in hopes of deterring assistance by customers and others in the enforcement of the decree and in the reporting of future violations.

The Court should supplement the proposed reorganization with a provision separating the Internet Explorer intellectual property and associated personnel into a separate company (with a license of the current Internet Explorer product to the operating systems and applications companies). In the alternative, the Court should order that the applications company make the Internet Explorer product – which provides no royalties now – an “open source” product so that other software developers could use the source code. Either of these small additions would ensure that the monopoly over productivity applications that Microsoft holds does not supplant the operating system as the point of leverage for a monopoly over the software used in Internet computing.

At the remedy stage of this case, the danger is not of doing too much but doing too little. This is the most significant monopolization violation proved in a generation, and the most significant monopolization case litigated to judgment in many decades, in an industry of surpassing importance to the current and future national economy. If Microsoft walks away from this case with only another set of conduct restrictions to evade, Section 2 of the Sherman Act will be drained of much of its practical effect. That is a price the public should not be asked to pay.

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