How to end Bill Gates' conflict with federal regulators

I watched the March Senate hearing about whether Microsoft is a monopoly that abuses its power. Other than laughter at Michael Dell, who apparently just graduated from the Peter Lorre school of acting ("Oh no, Senator, we don't discourage people from buying Netscape. What's that? You called 200 Dell salespeople and each of them told you our policy dictates that we don't sell Netscape? Hmmm ... may I have each of their names, please?"), my main reaction to the hearing was astonishment at the disingenuousness of some of Bill Gates' remarks.

Gates claimed that years ago IBM was an unfettered monopoly. He argued that if then-tiny Microsoft was able to take the PC operating system (OS) market away from gargantuan IBM, Microsoft's current market share can't be safe from rivals. That would be a good argument if IBM had been unfettered, but the government influenced IBM's behavior considerably. Several Department of Justice actions kept IBM walking on eggshells, afraid of looking like it was crushing rivals. The US government had IBM in court over antitrust matters from 1967 through 1981. The case ended in 1981 only because the Reagan administration dropped the suit.

Another great Gates argument was that Microsoft is generous because it doesn't charge developers for the right to create applications for Microsoft OSs. Yup, and the Seattle Power Authority is nice for not charging Microsoft a royalty on all the software written using local electricity: Microsoft couldn't run those computers without electrons, eh?

Most unbelievable was Gates' argument that Microsoft must constantly innovate because its products have a very short shelf life. NT is so different from DOS, Gates claimed, that Microsoft's previous monopoly in the DOS world doesn't affect Microsoft's ability to gain a monopoly in the NT world. But doesn't NT support programs for DOS and earlier versions of Windows? Don't most copies of NT still run the FAT file system that first appeared in DOS? NT hasn't achieved its popularity based on the wealth of only NT-specific applications.

Monopolies are not against the law. But using monopoly power in one market, such as OSs, to obtain a monopoly in another market, such as word processors or Web browsers, is illegal. Regulating monopolies makes Americans a little uneasy. No one complains about regulations on faceless corporations such as Standard Oil or AT&T. But when the government goes after an innovative and entrepreneurial figure such as Bill Gates (the Tom Edison of the late 20th century), we get a bit queasy. Regulating Microsoft seems personal.

Don't forget that when Microsoft takes on a competitor, it also gets personal. A couple of years ago, I heard Steve Ballmer, Microsoft's executive vice president for sales and support, explain that Microsoft's number-one competitor was Netscape. "They're the guys we've got to crush," he said, emphatically smacking his right fist into his left hand.

Microsoft's announcement that it plans to develop a WinFrame-like technology made Citrix stock plummet. Microsoft hadn't written one line of code, but analysts wrote off Citrix anyway, not because they think Citrix writes rotten code, but because they figure Microsoft can crush Citrix at will.

Still, many people want the government to stay out of this vibrant market. If Microsoft wants the government to drop the antitrust charges, why not eliminate all government interference in the software world? The government can start with the copyright law. After all, the notion that someone can own a piece of intellectual property is a relatively new idea in Western thought. Many countries still don't accept the idea of intellectual property.

Without copyright law, limited liability for corporations, and contract law, American business wouldn't be the same. The government creates protection for businesses that serve the common good. The question is whether a market with one OS, one browser, and one word processor serves the common good.