The Economics of the Microsoft Case
By David Henderson
My two favorite paragraphs from my review:
In the second chapter, “Decisions,” Page and Lopatka methodically lay out the decisions that Judge Thomas Penfield Jackson made in presiding over the case and that the Court of Appeals made in rejecting much of what Jackson found. This chapter, though dense, will be important for those who want to know the exact details of the decisions. The chapter’s discussion of the judge’s misconduct is especially colorful. Two months before he issued his findings of fact, Jackson gave a series of interviews to reporters from the New Yorker and the New York Times. In the interviews, he expressed negative views about the leading Microsoft officials, including Bill Gates. He said he viewed Gates as arrogant and unethical, and referred to him as “a smart-mouthed young kid … who needs a little discipline.” And Jackson compared Microsoft’s behavior to that of gangland killers. Who knew? Many of us thought Microsoft was just selling a fairly good product and figuring out how to extract from consumers as much of the value of the product as it could. Silly us. It was this conduct by Jackson that led the Court of Appeals to disqualify him and hand the case to Judge Colleen Kollar-Kotelly.
The authors don’t quite come out and say this, but I will: Judge Jackson seemed to see the case as a grudge match against both Bill Gates and the Court of Appeals. In the above quote about Gates being “smart-mouthed,” Jackson added a line that the book’s authors don’t quote. According to his interviewer, the New Yorker‘s Ken Auletta, Jackson said: “I’ve often said to colleagues that Gates would be better off if he had finished Harvard.” Auletta also quotes Jackson saying that part of his motive in splitting his finding of facts from his finding of the law was “to confront the Court of Appeals with an established factual record which is a fait accompli.” There’s nothing wrong with that, except that Jackson confessed that “part of the inspiration for doing that is that I take mild offense at their reversal of my preliminary injunction in the consent-decree case.” Rule of law, anyone?
And my other two favorite paragraphs:
Prosecutors in an antitrust case against a monopolist typically argue that restricting the monopolist’s conduct or, in the extreme, breaking up the monopolist will allow more competition. Page and Lopatka write, though, that the argument the government made in the Microsoft case was that the competition was “a battle between standards for the hearts and minds of developers.” Therefore, the authors point out, if the government had gotten its way, the result would not have been less monopoly but, rather, a different monopolist. They note that this discussion was prominent in the oral argument before the Court of Appeals. They reproduce a hilarious 2.5-page dialogue between one of the judges and the government’s appellate counsel, Jeffrey Minear, in which the judge drags Minear to a begrudging admission of that fact.
This is not to say that the Court of Appeals was always wise. In remanding the case to a different judge, the court required the government to show that Microsoft harmed competition in the market for browsers. That sounds like a plausible thing for the court to require until you learn that the same court precluded the government from proving that such a market existed. That could be raw material for a Monty Python skit.
The more one delves into antitrust law, the uglier it looks.