Microsoft should be punished

The feds failed to order a breakup when it could have done some good. Now, based on the government's findings, Sun, Netscape and Be are suing -- with good reason.

Editor's note: Second of a two-part series on the legal battle between Netscape and Microsoft. Read Part 1.

By J.J. Gifford

March 15, 2002 | Microsoft's legal team is a lucky bunch. First, its four-year antitrust battle with the government, which had once seemed so bleak, now looks like a victory. Second, the company has now been hit with a raft of private antitrust suits, guaranteeing the outside lawyers lots of billable hours and the inside lawyers job security for years to come.

So far, Netscape, Sun Microsystems and Be Inc. have all sued the software behemoth, alleging that they suffered from the wrongdoing so thoroughly documented in the government's case. Other competitors, sensing an easy victory, will likely follow suit.

While this may seem like just a legal pile-on -- literally the last chance for Be to make a buck, before vanishing forever -- the results may be far-reaching, and will especially affect technology-minded consumers. Microsoft has for years now used its monopoly power to quash competitors and promote its own products. Its stranglehold has sapped innovation from the industry and robbed consumers of the benefits of a competitive market. Indeed, Netscape's business has been nearly eviscerated by Microsoft's actions. Sun's Java, an exciting technology that has survived thus far, may nonetheless meet a similarly dire fate at the hands of Microsoft's just-launched .Net.

The government's case now looks like it will do little or nothing to curtail these wrongs. Chances of success for the private suits are also slim, but there is at least a possibility that they may indeed lead to stronger penalties and fairer markets. Regardless, consumers ought to applaud these actions, insofar as they seek remedies that the government has failed to pursue.

The lawsuits will get a boost from the government's case. The findings in that case -- documented in the court's findings of fact and conclusions of law -- will give the private suits a solid foundation, skewed strongly against Microsoft.

But the findings are only the foundation on which each of the plaintiffs hopes to build broader charges than the government was able to prove. For instance, both Netscape and Sun assert that Microsoft illegally monopolized the market for Internet browsers. The government's similar claim (of "attempted monopolization") was rejected by the Court of Appeals, which said the Department of Justice hadn't even defined the browser market.

Proving these and other charges will require some work. In addition, the standards for private antitrust suits are different enough that, even where the charges overlap with the government's, these will be far from simple victories. For starters, while the government showed that Microsoft's behavior reduced competition in certain markets, the private plaintiffs must further show that they specifically were harmed by that behavior. It can happen that a monopolist, in reducing competition overall, may actually benefit certain competitors.

This means that Netscape and Sun will eventually have to show that they would have been successful -- or, at least, more successful than they were -- but for Microsoft's illegal behavior. This makes a maddeningly speculative question suddenly critical: Was Netscape actually harmed? Would it have failed anyway?

It's impossible to know with certainty, of course. But it does seem clear that Microsoft damaged Sun and Netscape's businesses through aggressive and illegal tactics. The question remains: Will Microsoft pay a price for its behavior?

Next page: How Microsoft used its monopoly power to cripple Netscape