State AGs need to let case against Microsoft end

By Bob Williams, Evergreen Freedom Foundation

Microsoft and the Justice Department have reached a tentative settlement in the government’s antitrust lawsuit, but state attorneys general have contracted with one of the top trial lawyers in the nation and vow to continue the attack if they decide the penalties aren’t tough enough.

Doing so would show complete disregard for scarce taxpayer dollars and the needs of our faltering economy, as well as our national security.

By most accounts, our economy is in a recession. Ending the attacks on Microsoft is a key to recovery, especially in our state. That’s why computer industry experts hoped the settlement would coincide with the release of Microsoft’s new Windows XP operating system. Both are expected to invigorate the industry and the stock market.

Now state AGs are seriously considering pouring more time and taxpayer money into a lawsuit that amounts to nothing more than the government taking sides in a private business dispute. It was Microsoft’s competitors, not consumers, who brought complaints against the software company.

It is consumers and taxpayers who are footing the bill for the complaints.

The attack on Microsoft by the federal government and state AGs has already cost taxpayers more than $35 million in legal expenses. It has stripped Microsoft shareholders of at least $80 billion – 40 percent of which was owned by shareholders here in Washington state. That means our state’s residents have lost more than $32 billion as a result of the government’s lawsuit. States involved in the lawsuit watched the value of their state pension system investments drop almost $39 billion last year.

In addition to the recession, our nation is at war. Cyberspace security experts have warned of the growing threat of terrorists, hackers, criminals, and other hostile forces mounting attacks on America through cyberspace.

Word has it a later version of the destructive Nimda computer virus has just been detected again. The virus infects servers (computers that run applications) and makes infected systems vulnerable to intruders who may want to steal information and data. It was Microsoft that helped significantly decrease the impact of this virus by publishing software that users can download from the Internet to protect their systems.

In a society that relies on computer technology for everything from air traffic control to 911 dispatch systems, such attacks have the potential to (in the words of Homeland Security Director Tom Ridge) "shut down America as we know it and as we live it and as we experience it every day."

State governments need to stop attacking Microsoft and partner with it and others to ensure that our nation has adequate computer protection. Richard Clarke, the new White House special advisor on cyberspace security, has stressed the importance of working with private industries to secure the nation’s vulnerable networks against terrorist attacks.

Microsoft’s actions have increased the rate of technological development, but the same cannot be said for the actions of the government. Thousands of hours of labor and millions of dollars have been diverted from technological research and development to respond to the government’s lawsuit.

The government’s case falls short in several areas, most notably in the government’s misuse of antitrust laws. The proliferation of new products on the market and falling prices make it difficult to defend the idea that Microsoft’s alleged monopolistic activity has harmed consumers. Consumers do not have to buy Microsoft’s products if they don’t want to. This was illustrated best by an attorney from Ralph Nader’s organization who criticized the size of Microsoft’s market share, then proceeded to undermine his own arguments by proudly stating that his office used no Microsoft products.

It is litigation-happy state AGs who are harming consumers, not Microsoft. Certainly the rapid increase in useful technology has created enormous challenges for our society and many issues must be addressed, but the response from government should not be to crush all innovation by over-regulation and litigation. If the federal government is going to look suspiciously at lower prices and improved quality as evidence of illegal activity, American consumers are in big trouble.

State attorneys general need to let this lawsuit end and focus on the true threats to America’s citizens and consumers.

Bob Williams is president of the Evergreen Freedom Foundation, an Olympia-based policy research organization. He can be reached at (360) 956-3482 or effwa@effwa.org.

Contact: Marsha Richards, Communications Director, (360) 956-3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org