MICROSOFT CASE COULD EXPAND NEED FOR REGULATION
Resolution of Microsoft antitrust case could affect how other high-tech, Internet and telecom industries are regulated by govt., Progress & Freedom Foundation Pres. Jeffrey Eisenach said Wed. “The Microsoft case is an antitrust approach as opposed to a regulatory approach,” said Eisenach, whose foundation supports settlement that would change Microsoft’s structure. If there is no resolution of Microsoft case, govt. eventually may be forced to step in and regulate software manufacturer, he said. As Microsoft expands into other telecom and Internet areas, such regulation could follow into those sectors, Eisenach said, using Microsoft’s expansion into videogame and ISP markets as examples of company’s “embrace and extend” business philosophy.
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Idea of federal computer commission or regulation of computer technology by FCC isn’t as “far-fetched” as some may believe, Eisenach said, and unsuccessful or inappropriate resolution of case could invite regulation. Eisenach made his comments to our affiliate Washington Internet Daily after forum on Microsoft case at Cato Institute.
Several panelists at Cato forum said Microsoft case didn’t necessarily represent new policy by antitrust regulators, although application of issues was somewhat different. Forum focused on future of Microsoft case and necessity of antitrust law. James Miller, counsel for Citizens for a Sound Economy and former FTC chmn., said general antitrust structure was sufficient to regulate high- tech industries, but said antitrust laws often were misused by competitors or others with political motives.
Jonathan Zuck, pres., Assn. for Competitive Technology (ACT), said regulators would have to create “application barrier to entry” issue to “shoehorn” Microsoft’s scenario into traditional antitrust case. Attorney Kenneth Starr said Microsoft case was unique because of its dominance over consumer product, but said antitrust law was sufficient for high-tech economy.
But some argued that technology and its ability to change quickly presented different dynamic for antitrust regulators than other industries did previously. Zuck used videogame manufacturer Nintendo as example, emphasizing its 95% market share dominance in late 1980s and early 1990s and antitrust cloud that hung over that company. But without any antitrust regulation, Nintendo has fallen to No. 3 videogame producer, Zuck said. Levy said antitrust enforcement often was based on static view of market, which he said was inappropriate for dynamic flow of information technology market. But Eisenach said operating system couldn’t be compared with other technological products that have had short-lived dominance of market.
Zuck said successful breakup of Microsoft could lead to other antitrust cases against Internet or high-tech companies, such as AOL Time Warner. FTC’s review of AOL Time Warner merger brought up some issues of concern about high- tech antitrust review. Restrictions on AOL’s Instant Messenger would have placed antitrust regulators in position of making specific decisions about product’s design, Zuck said. Starr acknowledged there was legitimate concern when antitrust regulators became involved with product design.