What to do with Microsoft?

As the government’s antitrust case against Microsoft winds down, the question is no longer whether Microsoft violated antitrust laws but rather what can be done to curb its most harmful monopolistic practices.

The case being tried by the U.S. Department of Justice and 19 state attorneys general has been a textbook tutorial on how anticompetitive conduct harms consumers through higher prices, forced upgrades, degraded performance of competitors’ products, and restricted consumer choice. However, there is no clear remedy for the hydra-headed problem, and public debate on the issue is nearly nonexistent.

The corrective measures currently under consideration go far beyond those imposed on Microsoft in 1995, when, after years of investigating anticompetitive practices, the Department of Justice first legally pressed Microsoft to change its ways. Some have a familiar ring, such as breaking the software giant into different lines of business, like the earlier AT&T or Standard Oil cases. Other remedies are more novel. Among other things, the government might require Microsoft to:

Auction off several licenses for Microsoft’s intellectual property, creating instant competitors for its main software products.

Provide rival programmers with the technical information they need to make products work properly with Microsoft Windows or Microsoft Office.

Stop using discriminatory pricing to discipline computer manufacturers who offer software from competitors.

Support or not interfere with open or third party protocols that run on top of Windows or Microsoft Office.

* Unbundle various components of Windows or Microsoft Office.

Some of these sanctions could be implemented on a “stand alone” basis, while others would work together.

Microsoft itself has not really joined the debate, its leaders perhaps thinking the lack of consensus will benefit the company by giving an impression that no one knows what to do to solve the problems.

But one thing is clear: Any settlement or court-ordered remedy will have enormous impact on consumers, the future of the Internet, and the computer and software industries. Any corrective measure should fit well with an industry that is rapidly changing, so that the technological stagnation that now prevails in areas dominated by Microsoft is replaced with innovation. This case should end with a strong measure of protection for the public against monopolistic practices, and the remedies should be forward looking, aimed at preventing future harms as well as addressing past transgressions. The outcome will be instrumental in defining the rules for competition in the next century.

Essential Information and groups such as the Consumer Project on Technology are trying to promote broader debate on possible Miscrosoft sanctions and have scheduled a workshop on April 30 in Washington, D.C. The conference information is available at www.appraising-microsoft.org.