|
U.S. Won't Seek Microsoft Breakup
With Rep. Jay Inslee (D-Wash.)
Friday, Sept. 7, 2001; 2:30 p.m. EDT
After years of fighting an anti-trust battle in federal courts, Microsoft is set to remain one company, as the Justice Department and 18 states announced Thursday that they would not pursue a breakup. In addition, Justice Department officials are not expected to press further on charges that the technology giant unlawfully linked its Windows operating system to its Internet browser.
Does the move say anything about the Bush administration and big business? Where will the company and the case go from here? Rep. Jay Inslee (D-Wash.) represents Washington State's first district, where Microsoft is based. He was online Friday, Sept. 7 to talk about the case, the company and the tug-of-war between big business and anti-trust concerns.
The transcript follows.
Editor's Note: Washingtonpost.com moderators retain editorial control
over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
washingtonpost.com:
Good afternoon, Rep. Inslee, and welcome. You opposed the Justice Department's plan to break up Microsoft. What did you see as the main negative effect to consumers of a breakup? Are there any anti-trust measures that you would deem reasonable for the government to impose on Microsoft?
Rep. Jay Inslee: I believe the creative team at Microsoft would not become more creative or effective by a government bureaucratically imposed structure, which would build firewalls between people whose connectivity had been extremely valuable to the American economy and American consumers. I have felt throughout this litigation that the government's extremely aggressive approach would actually retard the pace of innovation, rather than to enhance it. Human history has rarely seen such a rapid rate of innovation, and frankly I don't trust the federal government to make it go faster.
As to what potential restrictions may be useful to consumers, it's much more important what the court of appeals thinks than what I think. The Justice Department's recognition that the government would lose on the breakup issue and the tying issue on the browser function severely narrow the scope of potential relief. The court of appeals did, however, leave open a number of potential conduct-related remedies, pertaining largely to the contracting methods between Microsoft and various other segments of service providers. Those pertain primarily to exclusivity issues and uniformity in pricing issues. We hope that the parties have a serious discussion on how to resolve those issues in the future.
Bothell, Wash.:
Congressman Inslee,
Do you stand behind the the way the Clinton administration has hurt the financial viability of Microsoft? Or do you stand against what they did?
Rep. Jay Inslee: I think the decision making, both in the last administration and in this administration, has been almost exclusively confined to the Justice Department itself. So I think other than in the selection of the personnel in the Justice Department, both White Houses have been largely uninvolved in the decision making in this case. That has been a long American tradition, to try to separate the political forces from the Justice Department decision making. And I think it has been a good policy for the country.
As I said before, from the beginning of this litigation, I thought the action taken by the Justice Department that was in existence during the Clinton administration was substantially flawed, and had the potential to do real damage to the U.S. economy. I think that this Justice Department's decision to drop the breakup and tying allegations was probably more a hard-headed recognition that the court of appeals had left it virtually impossible for the government to prevail than it was out of any emotional sense of love and affection for my constituents -- Microsoft. For that reason, I suspect, although we'll never be able to know for sure, I suspect that the ultimate result, regardless of who was in the White House, was going to be the same: Microsoft would not be broken up and the browser tying issue would be resolved in Microsoft's favor.
I think Democrat and Republican lawyers think alike in this regard; when you know you're going to lose, you get out of the case. And that's what happened here.
Des Moines, Iowa:
It seems to me that what we've witnessed from the Microsoft case, like we saw with the IBM case back in the late '70s, are two major problems. One, we're dealing with outdated antitrust laws and two, we're applying these laws to an industry that develops at a rate far beyond the federal government or federal judicial system operate. What are your thoughts on this and will Congress be taking steps to update these 100+-year-old antitrust laws?
Rep. Jay Inslee: I think the problem here has been more poor decision making by Justice Department lawyers than it has been old and albeit unchanged statutory language. Bill Gates himself I believe he has not suggested or proposed changes in the statutory language. What I think the experience in this litigation has proved is a proposition that we've been arguing now for the past couple of years, which is that the software industry has at least two characteristics which should make the federal government extremely judicious and slow before it attempts to dictate the structural alignment of the industry. One, the pace of changes in technology almost guarantee that by the time litigation of this nature is completed, the underlying technology that was in consideration will be obsolete. Two, because software's fundamental value is in intellectual captial rather than physical capital, government anti-trust enforcers need to recognize that the only way for those who make huge investments to develop this intellectual captial may be to have market share which may exceed percentages that may have existed in traditional bricks-and-mortar industries. The nature of intellectual capital is such that it requires enormous up-front investment, but only marginal cost for additional units. This is something I don't think the Justice Department that initiated this lawsuit fully understood. So I doubt that Congress will seriously be considering statutory changes, and we are hopeful that future anti-trust enforcers will be taking lessons from this experience.
Seattle, Wash.:
Congressman Inslee,
In this morning's local newspaper, I read that even with the government's retreat on its attempt to break-up Microsoft, they may try and delay things further and mandate changes in the latest software release, Windows XP. They went on to say that they effectively want to regulate Microsoft's "conduct" in the marketplace. Is it truly possible for the long arm of the law to mandate how a legal and law-abiding business markets it products? Can't the government just do the right thing and let this case finally rest?
Rep. Jay Inslee: If I were chief justice of the U.S. Supreme Court, I would take care of that, but I think that you will see now serious discussions to see whether there are conduct-related matters that could be defined that would both create a remedy to the concerns expressed by the court of appeals, which did as you know find against Microsoft in several respects, while at the same time assuring that Microsoft would be able to maintain creative control over their product. It is my understanding that the Department of Justice will not attempt to interfere with the release date of the new product, and I think that's obviously a wise decision. Microsoft, I think by their most recent changes in marketing strategies, has evidenced a willingness in some regards to address the court of appeals's decisions. That's why I'm hoping settlement talks will bear fruit, because we need to get this distraction off of the minds of my constituents and on threats to the U.S. economy. I do believe that Microsoft will stand firm, as they should, in insisting on the ability of the people at Microsoft to define the scope of their product and to maximize ways to improve its utility. That's a fundamental line Microsoft should not back up on one inch.
Bethesda, Md.:
There is evidence that Windows XP has the same anti-trust violations that Microsoft supposely removed from Windows. Do you think that there should be a seperate investigation on this?
Rep. Jay Inslee: Again, it's probably more important what the court of appeals thinks than what I think, and it would not surprise me at all if the Justice Department at least considers those issues. From my review of the technology, however, I see nothing in the XP consumer-friendly approaches that would cross the line established by the court of appeals decision. In some respects, Microsoft has changed some of their features regarding icons that has addressed some of the concerns of the Justice Department. So I'm hopeful that this negative experience for the U.S. economy of the last several years will not be repeated.
As an editorial comment, I should say that although I consider it a huge mistake by the Justice personnel to start this litigation, I don't want to express a suggestion that they acted in a way that they thought was professionally appropriate. I'm sure they are sincere in their beliefs, and with the advent of this whole new industry, perhaps it should not surprise any of us that there was some litigation somewhere about the boundaries of this new technology. I certainly wish it had not been in my backyard, however. But I say this too because it's important for the people involved to put down their swords for a moment and try to reach a consensus to end this quickly.
Breakup Microsoft:
I believe your wrong, take a look at Ma Bell when it was broken up. At first there was choas but in the end a clean more effective Bell system emerged. Even though it collapsed in recent years with merges of GTE and Bell Atlantic. I would think that this would be a benefit in the long run.
Rep. Jay Inslee: I think there's a fundamental difference between these technologies. It is my belief that the market would have sought some standardized platform even if Microsoft had not been a player. I believe that the emergence of the PC-based economy created an appetite for some dominant standardized platform akin to the need for standardized rail spacing during the emergence of the railroad industry. Again, this is a central fact that I think the Justice Department failed to understand -- that there is a great utility of having a relatively common platform upon which tens of thousands of creative people could build, and had it not been Microsoft, it frankly, I believe, may have been someone else. Speaking from local pride, of course, just not quite as good.
washingtonpost.com:
Correction: This paragraph should have read accordingly:
As an editorial comment, I should say that although I consider it a huge mistake by the Justice personnel to start this litigation, I don't want to express a suggestion that they acted in a way that they thought was professionally inappropriate. I'm sure they are sincere in their beliefs, and with the advent of this whole new industry, perhaps it should not surprise any of us that there was some litigation somewhere about the boundaries of this new technology. I certainly wish it had not been in my backyard, however. But I say this too because it's important for the people involved to put down their swords for a moment and try to reach a consensus to end this quickly.
Washington, D.C.:
Many people mention that breaking up Microsoft will negatively affect innovation. I'm a little confused: what exactly has Microsoft innovated? Most, if not all, of their technology, beginging with MS DOS all the way through Windows are "borrowed" or bought/stolen outright. Any insights on Microsoft's "innovation?"
Rep. Jay Inslee: I would suggest that part of Microsoft's creativity has been to find a way to make these technological advances, some of which did originally come, at least in their root, from outside sources, be most useful to consumers. I think Microsoft's genius has been to most accurately assess what consumers really feel as utility to technology and to find a way to combine those tools into useable products. There are many bankrupt companies in technologies from typewriters to airplanes that had whiz-bang technology that thrilled engineers and designers but left consumers cold because they didn't meet the demands of real world usage. What Microsoft has done, in my view, is to show supremely timely responses to consumer demands with amazing success and consistency. I think people short sell as well Microsoft's technological work, and I think the consumers are perhaps the ultimate judges in that regard.
By way of personal comment as well, I've had the privilege of getting to know many people at Microsoft whose names are not as well known as Bill Gates, and I can tell you they're some of the most committed, hardworking people I've ever met in any endeavor. Other than some campaigns I've been associated with, I've never seen a group of people who were so personally committed to using their energies to a common good. This hasn't happened by a fluke; it's happened because a culture existed that whetted the talents and energies of some supremely gifted people. And I respect their work.
Poulsbo, Wash.:
In light of EU posturing on Microsoft and other American business issues, is the U.S. government integrating internional risk implications vis-a-vis their actions against U.S. companies like Microsoft? These companies materialy contribute to the U.S. balance of Trade and competitivness in the global community.
Rep. Jay Inslee: I've always said that my friends in Poulsbo, Wash., were most adept at understanding this international problem, and I agree with the premise of the question. We faced a host of challenges from our friends in Europe on tax policy, privacy standards and other issues which can seriously disadvantage American competitiveness. I wasn't in the room when the Justice Department lawyers started this whole litigation, so I don't know if that was actually considered, but it should have been. As we are drafting legislation for these new technologies, it is amazing how often we have to consider the fact that in the Internet economy, one regulation imposed by one country has the potential to create a "lowest common denominator" situation. We hope that regulators are aware of that potential problem in the future.
Annapolis, Md.:
I am appalled at the government's actions. Microsoft's tactics are monopolistic/anticompetitive. I, and many other voters, are once again left with the idea that a big corporation's huge campaign contributions (over $2 million to Bush and the Republicans in the last election) worked to secure their interests over that of the American public.
We can only look to the work of the states attorney general and the European Union to protect our rights and ensure a competitive high tech arena.
Rep. Jay Inslee: Let me give you a comment from a Democrat who has been extremely critical of the Bush administration's selling out to various special interests in environmental matters on a host of occasions. I have said repeatedly that this administration has acted more as a handmaiden to the oil and gas industry than it has been to the American landscape and consumers' interests. So I have not been shy to criticize them. I must tell you in this instance, however, I believe it likely that hard-headed thinking lawyers who read the court of appeals decision and looked at the evidence would have reached this conclusion, even if they disagreed with it, that the government was going to lose, in the words of the vice president "big time" on the breakup and tying assertions. If that was true, as I believe it was, and I think the majority of legal analysts [believe] it would be a waste of taxpayers' resources to continue down this dead end. But before I reduce anyone's cynicism, let me say that we still need campaign finance reform for exactly the reasons suggested by the question. And that is why I hope we can roll over the Republican opposition to the Shays-Meeham campaign reform bill that I support.
Redmond, Wash.:
Will the sharp rebuke by the appelate court to Judge Jackson have any affect on his career?
Rep. Jay Inslee: I don't know. I'm unaware of any specific proposal in that regard. While I am reticent to criticize federal judges, I must say that I was astounded at the lack of judicial demeanor exercised by this particular judge.
washingtonpost.com:
That wraps up today's show. Thanks to everyone who joined the
discussion.
Stay tuned to Live Online:
Nightwatch:
Eric Brace at 3 p.m. EDT
Did you know that you can follow more than one Live Online discussion at
the same time? Just open another browser window and toggle back and
forth between discussions! And, if you miss one, catch up with the Live
Online transcripts.
Keep up with the latest in news, sports, politics and entertainment with
washingtonpost.com
e-mail newsletters.
NEW! Personalize your Post with mywashingtonpost.com.
Get customized news, traffic, weather and more.
| |
© Copyright 2002 The Washington Post Company | 
