The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“THE MICROSOFT CASE” mentioning the U.S. Dept. of Commerce was published in the Senate section on pages S6247-S6248 on June 30, 2000.
The publication is reproduced in full below:
THE MICROSOFT CASE
Mr. CRAIG. Mr. President, Judge Learned Hand once observed: ``The successful competitor, having been urged to compete, must not be turned upon when he wins.''
For Microsoft and the rest of our domestic high-tech industry, it may be too late to heed Judge Hand's warning.
Whatever justification the Justice Department used for its actions against Microsoft, the real measure of success in the Microsoft case is how it affects American consumers and the American economy.
From their perspective, the verdict is clear: The Justice Department's suit against Microsoft is bad for consumers, bad for high-
tech markets, and bad for the country.
Mr. President, our anti-trust laws are unlike health and safety regulations. Their purpose isn't to protect the physical well being of citizens, but rather their pocketbooks.
Like other forms of economic regulation, a successful effort requires two conditions. First, there must exist a market failure. Second, the government must be in a position to fix that market failure.
The case against Microsoft fails both conditions. Our domestic computer markets are working just fine. For thirty years, they have been characterized by falling prices, rising performance, and increased choice:
According to the Commerce Department, quality-adjusted prices for computer memory chips have declined 20 percent per year since 1985;
A chip that sold for $1778 in 1974 cost just 47 cents in 1996; and according to the CBO, software prices have been falling between 3 and 15 percent per year on average.
Meanwhile, new products are being introduced every day. There are currently over 25,000 applications designed to run on Windows, yet the fastest growing segment of the market includes so-called ``Microsoft-
Free'' applications.
Mr. President, I am one of the most computer illiterate members of the United States Senate, but I can pull airline flight information off the internet faster than anybody here. I use my Palm Pilot to do it. The Palm Pilot doesn't have any Microsoft products in it. You can browse the internet with your cell phone too. Again, no Microsoft.
And just recently, Linux-based software writer Red Hat announced a partnership with Dell Computer to accelerate the commercial adoption of the Linux operating system. This new system would compete directly with Windows-based computers.
Lower prices, better performance, increased choice--Mr. President, there is no market failure in our domestic computer industry. To suggest otherwise doesn't pass the laugh test.
Nor does the suggestion that consumers are better off following Judge Jackson's ruling. All the evidence suggests just the opposite.
One unique aspect of today's economy is that America's consumers are also America's owners. Fully one-half of American families own stock in American companies. Those families have been hurt by the Microsoft case.
On April 3, Judge Jackson issued his finding of law. That day, the Nasdaq stock index crashed. It fell a record 349 points. That's a loss to Americans of about $450 billion--or about 5 percent of our national income.
Gone, in one day.
Mr. President, a basic premise of anti-trust action is to defend consumers. We want to protect competition, not competitors.
Yet, in the Microsoft case, it was the competition that pointed the finger. Actual consumers were notably absent. So how did the markets treat Microsoft's competition following Judge Jackson's ruling? Poorly.
Of the companies that testified against Microsoft--Intel, IBM, Compaq, Oracle, AOL, Sun Microsystems, Intuit, Apple, and Gateway--only one saw its stock rise in the month following the Judge's ruling. Every other stock had dropped, some by as much as 30 percent.
This decline is no coincidence. According to a study recently published in the Journal of Financial Economics, whenever the government's antitrust suit has scored a victory against Microsoft, an index of non-Microsoft computer stocks falls. When Microsoft wins a round, those computer stocks rise.
Judge Jackson may have ruled against Microsoft, but the markets have ruled against government interference in the New Economy.
Mr. President, the only monopoly consumers need to worry about in the Microsoft case is the monopoly government regulation has over private industry.
Having stood on the sidelines while American's high-tech community led the American economy into the twenty-first century, the government is now stepping in and telling those same corporations how to run their business.
Economic regulation used to be popular in Washington, DC. At one point in the late 1970s, the federal government controlled the pricing and market access of all our transportation industries--trucking, airlines, rail, and pipeline--as well as the energy industry.
Today, those regulations are gone, and we are all better off. The last twenty years of economic growth and prosperity demonstrates that those regulations did the economy more harm than good.
In many ways, our anti-trust laws are the last toe-hold of economic regulation in the federal code.
Unfortunately, it's a growing toe-hold. The number of investigations by the Justice Department under our anti-trust laws has exploded in recent years, rising from 134 in 1995 to 276 in 1997.
Which begs the question, who's next?
Now that the Justice Department has been turned loose, who are the other innovative companies that might want to ensure that their lawyer's retainers are fully paid?
Intel: With a market share of 80 percent, Intel is by far the leader in sales of the microprocessor market for PCs. While this lead seems reasonable, since Intel invented the first microprocessor in 1971, innovation isn't a defense in anti-trust law. Intel's profit margins have exceeded 20 percent for the past five years.
AOL: With almost 25 million online subscribers, AOL is the clear worldwide leader in online services. Investor Research says: ``The service has continued to make significant gains in the number of customers, despite charging a monthly fee of $21.95 that is higher than the industry's standard fee of $19.95.'' Do higher fees indicate monopoly rents?
Cisco: Cisco Systems is the world's largest supplier of high performance computer internetworking systems. It supplies the majority of networking gear used for the internet. According to Investor Research: ``Demand for switches is being driven by a need for greater bandwidth by corporate users: Cisco dominates this market.'' Mr. President, the term dominates is bad in the anti-trust world.
EBAY: EBAY operates the world's largest person-to-person online trading community, with more than 10 million registered users and 3 million items listed for sale. You can purchase antiques, coins, collectibles, computers, memorabilia, stamps, and toys on EBAY from other individuals. Profit Margins: 70 percent plus. Seven Zero.
One irony in the Microsoft case is that Netscape, the frequently cited ``victim'' in the case against Microsoft, was in 1996 clearly a monopoly player in its own right, with over 80 percent of the browser market. Now, Netscape is owned by AOL, another monopoly-sized player.
America's high tech community used to shun government interference. They would be smart to continue to do so. The companies that encouraged the Microsoft lawsuit made a Faustian bargain. Now that the government has focused on this industry, it may be difficult to turn its attention elsewhere.
That's too bad. The case against Microsoft has hurt the high tech community where it counts--in its pocketbook. But the full cost of this ill-advised attack remains to be seen. Right now, America stands alone atop the New Economy. Increased government intervention is a good way to ensure that dominance doesn't last.
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