The court ruling in the Microsoft antitrust case sends out an important message to America's corporate titans: no matter how big or important you are to the US economy, you are not above the law.
Microsoft contributed enormously to the popular acceptance of computers. Apple may have been the pioneer of the computer revolution with its Macintoshes, but it was Microsoft that brought computing to the masses through the Windows operating system. Microsoft's clout in the US economy can be gauged by the impact of judge Thomas Penfield Jackson's decision on the market. The Nasdaq, the market where many technology companies are listed, slumped 349 points, its fifth biggest percentage loss ever, as investors fretted about further lawsuits that will dog Microsoft.
Bill Gates, the world's richest man, now faces the prospect that his mighty company will be broken up and consumers may have to deal with the devil they don't know instead of Windows, the devil they had come to accept grudgingly. But there is something admirable in the ruthlessness of the US economic system, where even a company as important as Microsoft can be taken down.
Innovation and competition lie at the heart of America's economic success. They override the importance of consumer convenience, which was one of Microsoft's arguments. If convenience was the dominant factor, the US government would never have broken up AT&T, the phone monopoly, in 1984. Customers grumbled at having to deal with the plethora of companies that resulted from Ma Bell's break-up. But AT&T's dismemberment had important economic consequences.
It allowed new companies such as MCI, the long distance phone company, to flourish. Phone charges in the US are among the lowest in the world because consumers can pick and choose from a sometimes bewildering array of telecommunications and cable companies. It may be inconvenient, but few Americans want a return to the monopolistic ways of Ma Bell and high phone charges.
It will be argued that the US government is always a step or two behind in the fast-moving world of technology. Netscape, the pioneering internet browser company, which was at the heart of the Microsoft antitrust case, no longer exists, having been absorbed by America Online, the world's leading internet service provider. As Judge Jackson said in his historic ruling, Microsoft succeeded in preventing - for several years, and perhaps permanently - Netscape Navigator and Java, a programming language, from fulfilling their potential to open the market for PC operating systems to competition.
Microsoft may have served consumers with a de facto standard for operating systems, although that is debatable. But Judge Jackson faulted Microsoft on two important counts: it did have monopoly power through its control of 95% of the market in operating systems and it abused that monopoly power by trying to stifle competition, not just from Netscape, but from Apple, Intel, RealNetworks and IBM. For an economic system whose lifeblood is innovation, Microsoft's tactics were unacceptable and detrimental to the US economy.
The US government may have missed the boat in the browser market - Microsoft's Internet Explorer has won that battle - but its victory, subject to appeal, is an important reminder to US companies that they cannot flout America's antitrust laws with impunity. Consumers may be inconvenienced in the short-term, but they will ultimately benefit as new innovative companies flourish. If Microsoft is broken up, these "baby Microsofts" could also be beneficiaries from this landmark case.
