Speaking at a meeting of business leaders at the University of California at Berkeley’s Haas School of Business Tuesday, U.S. Department of Justice (DOJ) Antitrust Division Head Joel Klein described Microsoft’s efforts to crush competition as “the time-tested tricks of the monopolist’s trade.”
Klein staunchly defended the DOJ’s recommendation to break up Microsoft, and insisted that the company spent money developing Internet Explorer “simply to prevent Netscape from gaining a market share.”
New Era, Same Rules
The fundamental principles embodied in the Constitution, the Bill of Rights, and the Sherman Antitrust Act still apply, according to Klein, and should not be changed in this new era.
“The Framers of the Constitution surely could never have imagined electronic eavesdropping; but the Supreme Court had no trouble ruling that this form of invasion of privacy was subject to the Fourth Amendment,” Klein said.
Directly addressing the antitrust provisions of the Sherman Act, Klein continued, “Core antitrust principles have served our nation, our citizens, and our economy extremely well in the more than a century since the Sherman Act was passed. And I expect that they will continue to do so in the 21st Century, during this period of remarkable technological progress and expansion.”
Klein added, “When it comes to antitrust enforcement, the new, new thing isn’t so new after all.”
Comparisons to AT&T
Referring to the breakup of AT&T, Klein said, “Then as now, the Department challenged illegal practices by a firm with monopoly power in a critical market, practices designed to maintain and extend the monopoly. Then as now, the Department was criticized for challenging a technology leader and a critical part of the economic infrastructure. Then as now, the Department sought a structural remedy because it is the most effective and efficient means of protecting and preserving competition.”
Just as the AT&T breakup “unleashed unprecedented competition, innovation and consumer benefit,” Klein said that he believes the breakup of Microsoft would “produce substantial innovation and competition in the software business.”
Klein also said that the two new companies would “have the incentive to compete vigorously through developing and licensing products that compete with the other’s core business.”
Microsoft Continues Campaign
Refusing to accept a breakup, Microsoft is continuing its public relations campaign and taking its case to Capitol Hill. The company sent a letter to Congress last week that said the proposed breakup would cripple its ability to compete.
Arguments made by Microsoft in the letter are expected to reappear in the brief the company is schedule to file today, which will outline their own proposed remedy.