The Federal Trade Commission
has officially rejected three senators' request to reopen an investigation
of Microsoft's alleged antitrust practices, according to a letter sent to
the congressmen by the FTC chairman.
The rejection, sent yesterday by chairman Robert Pitofsky, came in response
to a group of senators who felt the Justice Department's ongoing antitrust
investigation was proceeding too slowly.
The official FTC decision leaves one fewer avenue of redress for those who contend that Microsoft uses its domination of the desktop to gain market advantage for its own software products, including browsers and productivity applications. In addition to
the Justice probe, at least two state attorneys general are looking into
antitrust complaints levied against the software giant, which is currently embroiled in a civil suit with software maker Caldera.
The senators were acting upon allegations that Microsoft was not abiding by
the 1994 consent decree that forbade it from using its Windows operating
system to leverage the shipment of other Microsoft software. Microsoft
officials denied any such breach.
At the time of the senators' request last month, FTC officials made it
clear that the commission would not pursue an antitrust investigation that
overlapped a Justice investigation. The FTC has not precluded picking up
the investigation if Justice drops it, but such a scenario seems uncertain
at best, given that Justice picked up the investigation from the FTC in the
Whatever the outcome of the Justice investigation, Microsoft opponents
always have the option, however daunting, of bringing a civil lawsuit, as Caldera has done.
Caldera brought its suit against Microsoft in 1996, shortly after it
acquired Novell's DR-DOS operating system. The suit alleges that Microsoft
engaged in anticompetitive tactics. The case isn't likely to go to trial
If civil litigation were successful, however, it could benefit Microsoft's
competitors without addressing the underlying unfairness.
"If competitors file and win a lawsuit, the competitors get compensation--but not the consumers," said Gary Reback, a partner at Silicon Valley law
firm Wilson, Sonsini, Goodrich & Rosati who has represented Microsoft rival
Netscape Communications. "But the
chief benefit of a government suit is to provide for structural relief."
Meanwhile, Microsoft officials have dismissed attempts to re-involve the
FTC as desperate moves by competitors seeking to hamstring Microsoft in any
possible way. Audrie Krause, executive director of consumer interest group NetAction, disagreed and stressed that the average
consumer has a stake in breaking up monopolies.
"In a competitive market where consumers have choices, competitors have the
incentive to keep improving their products and lowering prices," Krause
said. "Some competitors lose [in this situation], but the point of the laws
is to protect competition, not competitors, and that benefits consumers."
Representatives of the senators who requested the FTC investigation--Conrad Burns (R-Montana), Craig Thomas (R-Wyoming), and Ted Stevens (R-Alaska)--were not
immediately available for comment.
"If Justice pursues something and gets a party to admit it's guilty, that
obviously helps a civil action," said Marilyn Tham, an associate at
Cotchett & Pitre, a Burlingame, California, law firm that
specializes in antitrust matters. "If the investigation terminates, you
don't have the same kind of ammunition, but it wouldn't preclude a civil
action from proceeding."
NetAction's Krause was frustrated but not surprised by the FTC's decision.
"It wasn't unexpected," said Krause. "We tried to encourage them
to take a look at Microsoft from a consumer perspective, but it was like
hitting our heads against brick wall. They were convinced that Justice was
doing just fine."
To press her case further, Krause is organizing a day of meetings with
Congressional staff on September 15 in Washington, D.C.