Washington Times
June 30, 2000
Prisoner held for ransom
By David Boaz
Now that the government's case against Microsoft is on
appeal, the discussion will revolve around arcane matters of law.
But the essence of the earlier Microsoft ruling hasn't changed:
They're stealing Bill Gates' company.
Judge Thomas Penfield Jackson ordered that the company be
split into two separate companies, as the Justice Department had
proposed. Mr. Gates will be allowed to run either the operating
systems company or the applications company. But half of the
company he has built will be taken away from him.
And that's not all. Microsoft has been ordered to share with
its competitors its application programming interfaces � the
asset it has spent billions of dollars to create. According to
The Washington Post, "The judge found that Microsoft used access
to the code to hurt its competitors and help its allies."
It's a strange kind of free enterprise in which companies
that create useful products have to give their competitors access
to those products.
All the economic debates and legal arguments are important.
But the real issue is that 25 years ago a couple of college
dropouts moved to New Mexico and started writing BASIC software
for the primitive Altair computer. In 1975 they had three
employees and revenues of $16,000. Over the next 25 years, they
grew to 36,000 employees and revenues of $20 billion by
obsessively figuring out what computer users needed and
delivering it to them. Bill Gates, Paul Allen and eventually
thousands of other people put their minds, their money and their
selves into building the Microsoft Corp. What they achieved is
now being taken away by Bill Clinton, Janet Reno and Joel Klein.
What is being taken is not just money, not just a company, but
the product of their minds.
The term "theft of intellectual property" hardly conveys the
enormity of the process.
Over the years Mr. Gates and his colleagues made a lot of
people mad, especially their competitors. Some of those
competitors delivered a 222-page white paper in 1996 to Joel
Klein, head of the Justice Department's antitrust division, and
urged him to do to Microsoft in court what they couldn't do in
the marketplace. Justice worked closely with the competitors for
four years, often showing them sentences or paragraphs in drafts
of the department's plans and soliciting their approval. The
politics of the case is a far cry from the Platonic ideal of
rigorous economists devising the best possible antitrust rules
and wise, disinterested judges carefully weighing the evidence.
What lessons will Americans draw from the Microsoft case?
� Don't be too successful. Success creates envy and attracts
government regulators, who seem driven to attack the most
productive people in our society. Bill Gates draws praise from
the cultural elite when he gives away his money �and he has given
away more than $20 billion � but he has done far more good for
the world by creating and marketing something useful than by
giving away some of the profits he earned.
� Hire a lobbyist. For about 20 years Mr. Gates and his
colleagues just sat out there in "the other Washington," creating
and selling. As the company got bigger, D.C., politicians and
journalists began sneering at Microsoft's political innocence. A
congressional aide told the press, "They don't want to play the
D.C. game, that's clear, and they've gotten away with it so far.
The problem is, in the long run they won't be able to."
Politicians told Bill Gates, "Nice little company ya got
there. Shame if anything happened to it." And Microsoft got the
message: If you want to produce something in America, you'd
better play the game. In 1995, after repeated assaults by the
Federal Trade Commission and the Justice Department, Microsoft
broke down and started playing the Washington game. It hired
lobbyists and Washington PR firms. Its executives made political
contributions. And every other high-tech company is getting the
message, too, which is great news for lobbyists and fund-raisers.
What lesson should they draw?
The antitrust laws are fatally flawed. When our antitrust
laws are used by competitors to harm successful companies, when
our most innovative companies are under assault from the federal
government, when lawyers and politicians decide to restructure
the software, credit-card and airline industries, it is time to
repeal the antitrust laws and let firms compete in a free
marketplace.
Janet Reno didn't send a SWAT team to Redmond, Wash., in the
middle of the night. But the bottom line is the same: She is
using the power of government to steal what the people at
Microsoft created.
David Boaz is executive vice president of the Cato Institute
(www.cato.org) and author of "Libertarianism: A Primer."
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