The Microsoft antitrust case in the new economic era

On October 2, 2112, it was an ordinary day, but it was a bittersweet day for the US Department of Justice, Microsoft and its competitors. On this day, after the settlement agreement reached between the Ministry of Justice and Microsoft was delivered to the federal court, federal judge Colin Coatley quickly approved the solution, and Microsoft and the Ministry of Justice shook hands, and the dust finally settled on the Microsoft antitrust case for several years. Although most analysts believe that the closing agreement on October 2 represents a great victory for Microsoft, Microsoft finally escaped the robbery of being divided; However, some scholars have pointed out that things are not so simple. Through the Microsoft antitrust case, there are still many deeper problems to be solved.

can Microsoft really sit back and relax?

although Microsoft escaped the fate of being split in two, can it really sit back and relax from now on?

this antitrust case is the largest antitrust case against enterprises initiated by the U.S. government in more than 51 years. In May, 1998, the Justice Department of the federal government, together with the city of 2118, including California, the largest state in the United States, and Washington, D.C., took the most powerful company in the world to court on the grounds that Microsoft violated antitrust laws. However, after federal judge Colin Coatley approved the solution of the antitrust case reached by Microsoft and the Ministry of Justice on October 2, 2118, and the 1 cities in 2118, which sued Microsoft together with the U.S. federal government, were split, including 9 cities in California and Washington. They thought that the agreement between the Ministry of Justice and Microsoft was not enough to curb Microsoft's monopoly tendency and protect the interests of consumers, and decided to continue to compete with Microsoft. However, it is not known whether these 9 States will appeal Coatley's judgment. The other nine states have approved the agreement in the Microsoft case and intend to put an end to it.

Nevertheless, Sun Microsystems, Microsoft's competitor and computer manufacturer, said that it would not stop there and would continue to hold on to Microsoft's antitrust case. Although it encountered legal setbacks in opposing Microsoft's monopolistic behavior, it would urge the states to appeal the case.

Now, even if nine states and Sun Company appeal, the possibility of Microsoft being split is slim. But even so, Microsoft can't ignore the warnings of competitors and consumers as in the past, that is to say, Microsoft can't sit back and relax from now on. Why do you say that? First of all, in 2111, seven judges of the U.S. Court of Appeals made a judicial judgment on Microsoft's unfair competition behavior, which still exists. Like a Damocles sword, it hangs over Microsoft's head at any time. As long as Microsoft commits criminal offenses in the future, this Damocles sword will stab it. Secondly, and most importantly, in order to prevent Microsoft's monopolistic behavior, the Ministry of Justice has set many restrictions on it in the agreement reached with Microsoft: First, Microsoft has to disclose some of its computer codes to other companies, so that these companies can design software compatible with Windows, including companies that design software for servers. This agreement clause will prevent Microsoft from monopolizing the server market by using Windows. Second, the agreement requires Microsoft not to interfere with what kind of software computer manufacturers choose, unless there is a technical conflict between these software and Windows. Third, in order to ensure the implementation of anti-monopoly measures, the Ministry of Justice has the right to check Microsoft's code, internal documents, accounts and related records. Fourth, the Ministry of Justice will also set up a three-member expert committee at Microsoft headquarters to supervise the implementation of the agreement by Microsoft. One expert is selected by Microsoft and the government, and the other expert is selected by both parties through consultation. The expenses of the committee are paid by Microsoft. The Ministry of Justice and Microsoft also agreed that this agreement will be valid for five years, which can be extended for two years as appropriate.

It is precisely because of these "tight hoops" that US Attorney General ashcroft confidently stated after the court's decision that the Ministry of Justice would "strongly guarantee" Microsoft to abide by the solution and pay close attention to Microsoft's implementation of the terms.

The turn of American antitrust law

However, Microsoft has successfully escaped the fate of being divided. Therefore, people naturally have to ask why.

In fact, since the Federal Trade Commission began to investigate the allegations of Microsoft monopolizing the market in 1991, the US government's anti-monopoly action against Microsoft has lasted for more than 11 years, during which the White House changed hands. According to the accusation of the Ministry of Justice, Judge Jackson ruled at the end of 1997 that Microsoft was prohibited from bundling its web browser with Windows, but in May of the following year, the Court of Appeal rejected Jackson's ruling. As a result, the Ministry of Justice and 18 states and cities dragged Microsoft into the dock again in May, 1998, and this time Microsoft was almost split into two companies. On June 28th, 2111, the U.S. Court of Appeals for the District of Columbia made a ruling, dismissing the decision made by District Court Judge Jackson in June last year to split Microsoft in two, but maintaining the ruling that Microsoft engaged in anti-competitive business practices that violated the anti-monopoly law. The court of appeal asked the local court to appoint a new judge to retry this historic antitrust case.

Objectively speaking, there are two reasons why the fate of Microsoft can take such a dramatic turn: First, President Bush, who is closely related to big enterprises, took the White House in 2111 and ashcroft took charge of the Ministry of Justice; Second, Microsoft has a strong team of lawyers and consultants, so it has the ability to lobby Congress and courts. However, in addition, experts believe that the most important thing is that the anti-monopoly law in the United States has changed, that is, from maintaining price competition in the past to promoting innovation in the new economic era.

antitrust work in the United States can be traced back to the end of 2119. In 1891, the United States passed the first anti-monopoly law-Sherman Act. In the following more than 1,111 years, the U.S. Congress passed a series of supplementary bills to strengthen the anti-monopoly work, which formed the basis of the U.S. government's anti-monopoly. American antitrust laws apply to almost all industries and companies. Anti-monopoly law prohibits three kinds of illegal acts: acts that hinder transactions; Merger of enterprises that may greatly reduce the degree of competition in a particular market; Anti-competitive behavior aimed at gaining or maintaining a monopoly position. The ultimate goal of the US government's anti-monopoly law is to "protect economic freedom and opportunities by promoting market competition".

according to the anti-monopoly law of the United States, although it is illegal to maintain or obtain a monopoly position through "unfair behavior", it is not necessarily illegal for a company to have a monopoly position or attempt to obtain a monopoly position. Therefore, if monopolistic behavior is not through improper means, it will not constitute a reason for splitting. This is actually equivalent to saying that in the new economic era, it is outdated to break the monopoly by splitting. Because in the new economic era, network technology has the characteristics of high competitiveness and rapid upgrading, any leading technology will be replaced by more advanced technology. In the high-speed growth of science and technology, monopoly is often a temporary thing.

In the eyes of the judges, Microsoft is the representative of the new economy, and the vitality of the new economy lies in continuous technological innovation. Microsoft also defends itself with innovation as a weapon, Bill? Gates said in court that the anti-monopoly law of the United States is to protect the competition mechanism rather than competitors. The anti-monopoly law does not oppose the monopoly position obtained through normal competition, but opposes the use of unfair competition means to obtain or consolidate the monopoly position. At&T (AT&T) split up because its monopoly position was established through the special policy of the US government, while Microsoft's position in the operating system was obtained through market competition.

relevant experts pointed out that compared with some major antitrust cases in American history, the Microsoft case has remarkable characteristics. First of all, Microsoft is basically a monopoly company developed by itself; Mobil Oil Company and AT&T Company, which were split in 1911 and 1984 respectively, became "giants" in their respective industries by annexing competitors. Secondly, the development of Microsoft is based on intellectual property rights and knowledge innovation. If "Windows" software has been consistent for many years, it may have been eliminated by the market long ago. Thirdly, although Microsoft has an absolute monopoly on the PC operating system market, it has not used this monopoly advantage to raise the price unreasonably, and its web browser was given away for free at the beginning. In addition, this is the most representative antitrust case since the United States entered the new economic era, and its outcome is likely to become a precedent for antitrust cases in the high-tech field in the future.

therefore, in view of such a landmark case, the U.S. department of justice has played the banner of "promoting innovation". On the eve of Jackson's decision to split Microsoft in 2111, then Attorney General Renault said that the anti-monopoly action against Microsoft was to create a competitive environment and increase consumers' choices. This view has been endorsed by many anti-monopoly experts. Robert, an expert on antitrust issues at the Brookings Institution in the United States? Litan believes that innovation is the most important driving force in most industries in the United States, so the Microsoft case must have the value of setting a precedent. Paul, a famous American economist and founder of the "new growth theory"? Romer also supports antitrust action against Microsoft. He believes that innovation is the most important factor to determine consumer welfare, and competition is more likely to bring innovation than monopoly.

maintaining the vitality of innovation is the key to whether the American economy can continue to lead the world. in recent years, the focus of American competition policy with antitrust as the core has shifted to promoting innovation. It can be said that in order to revive the information industry and promote the development of science and technology, the US government finally gave up splitting Microsoft.

However, in American economics, there are more and more voices questioning the antitrust law. Some scholars believe that the current anti-monopoly measures are often unfavorable to enterprises that have achieved market dominance, even if the dominant position of enterprises is achieved through high efficiency and low price; In reality, it is difficult to judge whether an enterprise is monopolized or not, whether it promotes competition or inhibits competition. For example, the famous liberal economist Friedman pointed out, "Over the years, my understanding of anti-monopoly law has undergone major changes. When I first entered the business, as a supporter of competition, I was very supportive of the anti-monopoly law. I think the government can promote competition by implementing the anti-monopoly law. But years of observation have told me that the implementation of the anti-monopoly law has not promoted competition, but has suppressed competition, because bureaucrats are always reluctant to give up the power of regulation. I have come to the conclusion that the harm of the anti-monopoly law far outweighs the benefits, so it is best to abolish it altogether. " Oman, another tycoon in American economics and a master of price theory? Archin said: "I don't think any economist will support the prosecution of Microsoft by the Ministry of Justice, at least I haven't seen it." Indeed, there is no convincing answer to the question of the relationship between monopoly and competition that puzzled Marshall, a great economist at that time, and even to the question of whether bundling of Microsoft is monopoly or competitive behavior. But what is certain is that no matter what the outcome of the Microsoft case is, it will inevitably have an impact on the direction of the US antitrust policy.

In short, with the resurgence of laissez-faire economic theory, in the new economic era, the anti-monopoly law, regarded as the patron saint of free competition market economy, is also seeking to change. The Microsoft case is a concentrated reflection of economists' reflection on this issue.