Defending Bill Gates

Bill Gates is a bully, a guy who’s guilty of being too successful,
too innovative, too visionary and too good at rising above the
competition. Invoking a federal statute from 1890, that’s the “findings
of fact” of Judge Thomas Penfield Jackson.

Reacting to a massive wave of mergers, Congress passed the Sherman
Antitrust Act in 1890. It was a time when Standard Oil was grabbing up
over 100 firms, gaining control of 90 percent of the nation’s oil
refining capacity, and United States Steel, born from the merger of
smaller firms, was capturing control of the nation’s steel. The Sherman
Act sought to restore competition and roll back the monopolization.
“Every person who shall monopolize, or attempt to monopolize,” states
Section 2 of the act, “shall be deemed guilty of a felony.”

In Microsoft’s case, it was primarily by way of hard work, a
pioneering spirit, vigorous competitiveness and brilliant business
strategies, rather than through predatory mergers, that the company
ended up with the dominant position in the operating system market.
Still, it’s the company’s preeminent position, says Jackson, along with
Microsoft’s refusal to share its
intellectual property with Netscape, its development of “new and
improved” versions of Windows at lower prices, its ability to stay one
jump ahead of competitors, the fact that the company charges less than
its rivals and attempts “to increase its product’s share of browser
usage by giving it away for free” that has allegedly stifled innovation,
harmed competing companies and hurt consumers.

Outside of Judge Jackson’s courtroom, it’s a different picture, one
where it’s tough to find many consumers who say they’ve been victimized
by Bill Gates. In a Nov. 5 poll of 1,000 registered voters, for
instance, 92 percent of those familiar with the Microsoft antitrust case
believe the Redmond, Wash.-based software giant has not done anything to
harm consumers. Instead, 77 percent say the government’s lawsuit against
Microsoft is an example of wasteful government spending. And worse, say
67 percent, the most likely fallout of government litigation in the
high-tech industry will be poorer products at higher prices. “No mob is
demanding a hanging,” says columnist Nicholas von Hoffman, “as they did
in Rockefeller’s time.”

In fact, rather than seeking a hanging, most of us see Bill Gates as
a driving force in the U.S. economy, a central player in the country’s
increased productivity and enhanced international competitiveness. With
no government subsidies, no special tax incentives, without forcing
anyone to buy anything, Gates has succeeded in delivering no less than a
revolution in efficiency to every sector of American life. “It’s hard to
say where we’d be now without him,” says a college friend, a medical
researcher at a New York university. “Gates created a new environment of
technology, nurtured it along. Twenty years ago, when a physician would
ask for information on a surgical procedure, or on how to treat an
illness, I’d have to go to the Undex Medicus in the library, look up the
citation, the article’s title and journal source, and go to the medical
journal collection in the library for the full text. If it wasn’t in
stock, we had to request a copy with an inter-library loan, or request a
copy from the National Library of Medicine in Washington. It took 10 to
15 days, and requests for information came in while patients were in the
operating room, under the knife, so to speak. Today, the information is
available instantly, online. More times than I can remember, I’ve been
told by a doctor that the information saved someone’s life. I hate to
think of the opposite, about what was happening when it took two weeks.”

A few days after the Microsoft ruling, the lawyers began to circle.
“Lawyers are scouring the judge’s scathing finding that Microsoft used
its monopoly to hurt consumers and competitors, looking for
opportunities to seek monetary damages,” reported the Wall Street
Journal. “Veterans from the cigarette wars are plotting to sue Microsoft
in a wave of private litigation,” said The Washington Post. “If the
onslaught unfolds as expected, teams of lawyers will turn Microsoft into
the next Philip Morris, tangling the company in courts
across the country.”

Robert Hall, a Stanford economics professor (and potential “expert
witness”) estimates the price of a copy of Windows 98 might have been
$10 lower were it not for the misconduct described in Judge Jackson’s
findings. In the money game of class action lawsuits, that means $10
multiplied by more than 100 million copies, and tripled (triple
damages), producing a jackpot of $1.5 billion for the lawyers, and $30
for each allegedly damaged customer.

“It’s a sad day for entrepreneurs,” said Brad Silverberg, a former
Microsoft senior vice president. “It’s a sad day for consumers. It’s a
sad day for innovation.” It’s not, however, all sad. The good news is
that the richest man in the world is now on the side of tort reform.

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Ralph R. Reiland is an associate
professor of economics at Robert Morris College in Pittsburgh, Penn.