How Will We Know Who Won?

[charles mueller <cmueller@metrolink.net>]

          Once upon a time, the Antitrust Division of the U.S. Justice
  Department was an impressive fighting force for the American public.  (FDR's
  trustbuster, Thurman Arnold, comes to mind.)  It went to court
  routinely--and it won.  Afterwards, prices fell and monopoly market shares
  dropped.  Since about '75, it's been in the business of drafting 'consent
  decrees'--corporate averments that they've never sinned since the charter
  was first bestowed but that, by golly, they'll nonetheless go and sin no
  more.  Today, the Justice Department lacks only 2 things to beat Bill
  Gates--will and 
  competence.   
  
          It can be safely predicted, then, that--as I've said before--Bill
  will win again.  How does a toothless government bureaucracy like the
  Antitrust Division beat someone who has $40 billion in his pocket--in a
  court (D.C. Circuit) appointed by Ronald Reagan?  (Remember the judges who
  picked Kenneth Starr to pursue Clinton?)
  
          How will we know who won?  Bill currently has a monopoly, right, an
  80% to 90% share of the OS market, the only one that really counts?  And he
  engages in some "unfair" methods of competition--tying and so on--right?
  And both his monopoly and his unfair practices have some antisocial
  "effects,"  like inflated prices to the public, suppressed technologies, and
  so on?  Ah, but can it all be PROVED by the wimpish DOJ lawyers--while being
  muscled around by Gates' top legal guns--to the satisfaction of Reagan
  judges, who've never seen a monopoly they didn't love?  (I reviewed the
  antitrust cases decided by the D.C. Circuit for the 5-year period 1986- 91
  in my journal--a total of 28 cases--and found no decision for an injured
  plaintiff. Vol. 24, No. 4, pp. 15-26.  The guiding antitrust principle of
  this pro-monopoly court is, the defendant always wins.)
  
          Bill holds all the cards because he knows that the D.C. Circuit
  Court is in his pocket.  He knows its Reagan judges hate antitrust, that
  they'll set aside anything he asks them to.  So he'll agree to a little
  tinkering with the 'consent decree' he's now accused of violating--to clear
  up any 'ambiguity' in the language his lawyers put in last time--and the
  Justice Department will announce a great victory for the 'consumer.'  Bill's
  PRICES will of course be unaffected.  His practices--the exclusion of his
  competitors from all the markets that count--will go on, albeit under
  perhaps other names.  His market SHARE--the 80% to 90% of the OS market that
  gave him his modest current $40 billion--will remain undisturbed.  His
  Microsoft STOCK price will go UP another notch.  His monopoly marches on.
  Bill won.  DOJ lost.
  
          The way way one tells who won an antitrust case is straightforward:
  Did the monopolist's price FALL--and by how much?  Did his stock price
  plummet?  Did the monopolist's market share shrink--and by how much?
  They're connected:  Until his market SHARE is punctured, his price won't
  drop.  If there are no real changes in these 2 numbers, Bill won.  The U.S.
  public lost.  
  
          Ralph Nader's 'Appraising Microsoft' conference of November 13 and
  14, 1997, will come and go.  It will generate a lot of words but, in my
  view, neither it nor the Justice Department's current challenge to Bill will
  produce serious economic results.  Nader won't ask for a break-up of Gates'
  90% share of the OS market.  And without that, nothing will change.  
  
          Charles Mueller, Editor
          ANTITRUST LAW & ECONOMICS REVIEW
          http://webpages.metrolink.net/~cmueller
          
  
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