Microsoft's Antitrust Case: Assistant Attorney General Contradicts Company's Claims

Strategic Insights -

Assistant Attorney General Joel I. Klein disputed Microsoft's assertions that a breakup of the company into two separate entities would harm consumers and stifle innovation. Speaking at a forum on the new economy at the University of California at Berkeley, Klein argued that the plan would actually lead to "exciting new products, with more choices and lower prices for consumers." He also countered Microsoft's claims by citing the successful deregulation of AT&T in 1984, which resulted in increased competition and innovation without harming efficiency.

Key Takeaways:

  • Microsoft's argument that a breakup would harm consumers and stifle innovation is "wrong as a matter of fact" according to Assistant Attorney General Joel I. Klein.
  • The separated companies would be free to exchange technical information, reducing the potential loss of efficiency in the reorganization.
  • Microsoft has long claimed to provide third-party developers with all necessary information about its operating system, which would negate the need for separate companies.
  • The breakup of AT&T in 1984 was also disputed by opponents who claimed it would imperil the efficiency of the telephone network, but the opposite was true.
  • The AT&T case was cited as an example of how deregulation can lead to competition and innovation without harming efficiency.
  • Under the plan to break up Microsoft, the separated companies would be entirely free to compete with each other in all lines of business.

Statistics:

  • Microsoft has been asked by the Justice Department and 17 state attorneys general to break into two companies.
  • The Justice Department's antitrust division is led by Joel I. Klein.
  • The federal judge has given Microsoft 10 days to respond to the plan.
  • The proposed breakup would involve separating the Windows operating system from the Office suite of application programs.
  • The AT&T deregulation case in 1984 resulted in increased competition and innovation without harming efficiency.

Sources:

  • The Washington Post (no date cited)
  • A United States Department of Justice press release (no date cited)
  • Joel I. Klein's speech at the University of California at Berkeley (no date cited)