There seems to be no doubt that Microsoft has a monopoly position in the computer operating system market, has misused that position and has violated antitrust law to maintain it, a group of experts told a campus audience last week at a forum sponsored by the Cornell Computer Policy and Law Program.
But what the government should do about it is not so clear. The three Cornell experts from three different fields each offered a different answer.
The panel, held Sept. 27 in B-17 Upson Hall, brought together George Hay, the Edward Cornell Professor of Law and professor of economics; Kenneth Birman, professor of computer science; and Michael Waldman, the Charles H. Dyson Professor in Management and professor of economics. Tracy Mitrano, policy adviser for Cornell's Office of Information Technologies and director of the Computer Policy and Law program, introduced the panel.
Hay began by recapping the case, which began, in its current incarnation, when the U.S. Department of Justice sued Microsoft in 1998. The suit alleged, among other things, that Microsoft used its position as maker of the Windows operating system to force computer manufacturers to bundle Microsoft's web browser, Internet Explorer, with Windows, effectively shutting out the previously most-popular browser, Netscape. Most recently the U.S. Court of Appeals for the District of Columbia upheld the finding that Microsoft had violated antitrust law, but rejected, at least for the moment, an order to break up the company by separating the operating system division from other applications. The case was returned to the D.C. district court to reconsider remedies, with the case assigned to a new judge.
"The only thing before the court is what to do," Hay explained. And later he offered his opinion: "I think breaking up is the only thing that will work." He pointed out that when AT&T was broken up into several "baby Bells" and a separate long-distance company there were dire predictions of disaster, but the result has benefited consumers.
Birman described Microsoft's position as a "natural monopoly," one that comes about because it works. "In the world there are many forms of natural monopolies, and those that aren't in them resent it," he said.
The problem, he said, is that high-tech companies make their money by innovating. Microsoft must continually add new features to its products to persuade people to buy upgrades. They're running out of new things to add that anybody wants, and as a result they are trying to move to a system under which software is leased rather than sold. So, Birman said, the best way to benefit consumers would be to let Microsoft have its monopoly but not to allow them to move to leasing, in order to encourage further innovation. He also suggested that Microsoft should be required to "open up Windows APIs," meaning that the company should supply information that would allow competitors to create and sell new modules that would replace parts of the operating system.
Finally, he noted that the current patent system is outdated for a high-tech world and discourages software innovation.
According to Waldman, classic economic theory would say that Microsoft shouldn't want to destroy Netscape, since anyone who wanted to use Netscape would have to buy a copy of Windows. He also noted that Microsoft's competitors really had no way to compete, since Microsoft could (and did) reduce the price of its add-on product to zero. These things, he said, were evidence in the case.
Breaking up the company, he said, would hurt consumers. Telling Microsoft it can no longer tie its web browser to Windows would also hurt consumers, he added, and anyway it's probably too late for that step to do Netscape any good. The only thing that would offer a real deterrent to future abuses, he said, would be a massive fine, on the order of $50 billion. (However, Hay said that under the present legal system such fines are impossible.)
What method is actually used will be up to U.S. District Court Judge Colleen Kollar-Kotelly, who has ordered settlement talks between the parties in the case.
The Computer Policy and Law Program, launched in 1996, aims to assist Cornell and other public institutions in dealing with the legal questions raised by new information technology. Until recently, the program has focused on outreach to other institutions and has been largely invisible to the campus. Mitrano said that this forum is the first of a series designed to extend IT ethics education on campus.
Steve Worona, formerly assistant to the vice president for information technologies and now working with Educause in Washington, D.C., continues as co-director with Mitrano of the CPL summer program.
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