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FTC won't probe Microsoft

The FTC's chief officially rejects three senators' request to reopen an investigation of Microsoft's alleged antitrust practices.

    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 first place.

    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 before 1998.

    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.