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March 2001
Volume 19, Number 3

 

The Microsoft Conspiracy
Thomas J. DiLorenzo 

Some ninety percent of all antitrust lawsuits are litigated by the private antitrust bar, which is to say, they involve one company suing one of its rivals, as opposed to the government bringing the suit. As a rule, whenever one company sues a rival it is because the rival is charging lower prices or providing superior products and services. Antitrust lawsuits are meant to throw a monkey wrench into the smoothly-functioning gears of the competitive process, and are therefore inherently anticompetitive. 

A new book on the Microsoft trial, Pride Before the Fall, by journalist John Heilemann, reveals that even though Microsoft is being sued by the Clinton "Justice" Department, the government's decision to file the lawsuit was the result of a conspiracy by Microsoft's competitors, their political benefactors such as Sen. Orrin Hatch (Rep. Utah), and résumé-building bureaucrats like former Assistant Attorney General Joel Klein.

In other words, the lawsuit was never an attempt by government to protect the consumers from a rapacious monopolist, as the Official Propaganda Line purports; it was always a corrupt, underhanded trick perpetrated by Microsoft's sour-grapes competitors.

Heilemann discovered that the conspiracy was hatched in August 1997 when Netscape sponsored a two-day meeting in Silicon Valley with Sen. Orrin Hatch, staff members of the US Senate Judiciary Committee, and the general counsels of other Microsoft competitors such as Sun Microsystems and Novell (from Utah). Heileman describes the meeting as an "anti-Microsoft three-ring circus.

A leader of the anti-Microsoft conspirators was venture capitalist John Doerr, who was so close to Al Gore that there were rumors in Silicon Valley of his possibly being Gore s running mate in 2000. This connection led to a visit to the conspirators by John Podesta, the Clinton Gore White House chief of staff. 

An anti-Microsoft (and anticompetition) lobbying organization was given the Orwellian name of "ProComp," and enlisted the renowned antitrust "scholar" Bob Dole. Robert Bork was also offered a large fee to become a spokesman for ProComp, while Sen. Hatch was reportedly incensed over stories his campaign contributors Novell and Caldera Corporation had told him about Microsoft's alleged "dirty deeds." 

Hatch subsequently tricked Bill Gates into appearing at a kangaroo court-style "hearing" which, if nothing else was a testament to ProComp's ability to spread campaign contributions around Capitol Hill. "In a four-hour hearing, not a single member of the Senate Judiciary Committee had offered a serious defense of Microsoft."

The political hack Jeff Eisenach, who ran Newt Gingrich's "think tank," the Progress and Freedom Foundation, and who had never been employed by even a third- or fourth-rate university, commented to Heilemann that Microsoft's only defenders appeared to be "some Austrian economists at some second-rate universities."

The conspiracy got down to serious work when Sun Microsystems invested $3 million in "Project Sherman" (presumably a reference to General William Tecumseh Sherman) that recruited a bevy of $700-an-hour "consultants," including Chicago School economist Dennis Carleton, to put together an actual mock case against Microsoft to be presented to the Clinton- Gore "Justice" Department. 

As Heilemann described it, "the political sensitivity of the project was . . . high, for here was one of Microsoft's most ardent competitors bankrolling a costly endeavor to influence the DOJ--an endeavor undertaken with the department's encouragement . . . and conducted in utmost secrecy." 

This was such a deceitful act, that "everyone involved was sworn to strict confidentiality," with one of the participants saying, "I haven't even told my wife about this." The reason for such extreme secrecy was that if word got out that the government's case was actually being put together by Microsoft's competitors, the public was likely to catch on to the reality that this was an anticompetitive scheme that could only be harmful to consumers.

Project Sherman succeeded in presenting a case that was, in fact, adopted almost verbatim as "the government's" case against Microsoft. So when Judge Thomas Penfield Jackson adopted almost word-for-word the government's proposed "remedy" to break up Microsoft, he was in reality adopting the secret plan of Microsoft's competitors to cripple their strongest rival and to diminish competitive pressures in the industry. Either the judge was completely duped, or he was a corrupt conspirator. 

The conspirators always recognized that they really had no case, for the consumers of Microsoft' s products were happy, prices were falling, product quality was rapidly improving, the high-tech companies (including Sun) were thriving, and innovation was ballooning. The best they could come up with was the unprovable assertion that even though tens of billions of dollars were being invested annually in research and development in the high-tech industries, even more would supposedly be invested if Microsoft were broken up or destroyed by the antitrust lawsuit. 

The conspirators recognized this pile of horse apples for what it was, so they then hired a Washington, DC, lawyer named Jeffrey Blattner, a former chief counsel to Sen. Edward Kennedy who made his reputation in Washington by helping to wage the campaign of character assassination against Robert Bork when he was nominated to the US Supreme Court. Now, however, for $700 an hour he would join with Bork to engage in "stroking [Capitol] Hill, spinning the press [i.e., lying to them], and plugging any leaks" by the conspirators (i.e., making sure the truth never seeped out). 

What all this means is that the Microsoft case is arguably the most odious example in all of antitrust history of the law being used by a cabal of sour-grapes competitors to thwart competition in their industry. This, of course, has always been both the intent and effect of antitrust regulation. George W. Bush should drop the case and appoint new heads of the Antitrust Division and the FTC who will do their best to eliminate their own government jobs before returning to the real world. 

_________________

Thomas J. DiLorenzo is professor of economics at Loyola College and an adjunct scholar of the Mises Institute (tdilo@aol.com).

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