Outdated laws keep markets from growing

Freedom New Mexico

This month marks the expiration of the 10- year antitrust settlement the U.S. Justice Department reached with Microsoft Corp. in 2001. We wrote extensively about the action beginning in 1998, when the Justice Department first went to court against Microsoft.

In those 13 years, even a casual observer of technology couldn’t help but notice vast changes. The crux of the 1998 complaint against Microsoft was that it was “tying” its Web browser, Internet Explorer, into its dominant Windows operating system. Although people could opt out of using IE on Windows, they could not remove IE from their computers because it had become an integral part of the operating system.

More importantly, technology today is so much different than it was in 1998. People are as likely to interface with the Internet on other devices, such as cell phones or tablet computers, as on desktop or laptop machines.

“Not only do we have choice on Web browsers, but the whole issue has been overtaken,” James Gattuso told us; he’s a fellow in regulatory and communications issues at the Heritage Foundation. “Looking at one particular technology, such as browsers or even the desktop, is beside the point today.” He said that having a large market share in any technology today “doesn’t make any difference. People go anywhere they want to on the Internet.”

With mobile “smart phones,” for example, there is no dominant player, although Apple’s iPhone and the many devices using Google’s Android system are popular, as are BlackBerry devices.

The Justice Department is saying that all these innovations are the result of the restraints the 2001 agreement put on Microsoft’s dominance. Nonsense.

In 1998, no one foresaw the resurrection of Apple, which almost went bankrupt in the mid-1990s until co-founder Steve Jobs returned in 1997. Last year Apple surpassed Microsoft to become the world’s largest technology company. The rise of Apple is not due to government litigation, but to the brilliance of Jobs and the whole Apple team.

Similarly, Google has outperformed Microsoft’s Bing search engine because Google is the technology that consumers prefer — at least for now.

Unfortunately, the Justice Department has moved on to Google, with four major actions against the firm in the past three years. For example, in April the government forced a settlement on Google, mandating supervision for five years of the firm’s acquisition of ITA, a travel software company.

But do Americans really lack choice for making travel arrangements? Even if one company dominates a field, Gattuso said, “somebody will come up and compete with it. By going after big companies that provide the most to consumers, the government is punishing them for providing what consumers want.”

Indeed, this is a good time to review antitrust policy as a whole. Antitrust actions were begun in 1890 with the Sherman Antitrust Act, which was aimed at big, lumbering industrial companies. It seems out of synch with today’s nimble high-tech companies.

Also, U.S. firms today face tough foreign competition. Hamstringing our best companies with outdated laws does not compute.