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There's More Than One Way to Bust a Trust
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The news that Microsoft settled one of its last remaining antitrust lawsuits in October presents an opportunity to review the whole episode and assess what it means for the next generation of business innovators. The matter is of special interest to me. Working at the Justice Department in the mid-1990s, I helped lead the first investigation of Microsoft.
Before we get to the lessons learned, a brief recap: It goes without saying that Microsoft's rise to power on the strength of its operating systems for desktop PCs is one of the great American business success stories of all time. But as I argued a decade ago, the company abused its extraordinary power to cement its dominance in the operating systems market. Then it attempted to extend its monopoly into new markets, including Web browsers and online media players.
Courts in the U.S. and Europe found that Microsoft broke the law. After Justice won its most celebrated case, which concerned Microsoft's efforts to destroy Netscape's browser business, I argued in amicus curiae briefs that Microsoft should be split into three Windows companies. This would have restarted competition in the operating systems market and, in my view, would have led to better bug-free desktop operating systems than are now available.
Unfortunately, antitrust enforcement can be slow and unreliable. The Bush Justice Department was less interested in reining in Microsoft than Clinton's was. But though the company avoided a breakup, it did have to pay several billion dollars to settle related claims, and it is now subject to various restrictions on the way it does business.
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