Originally created 09/09/01

Microsoft wins at hardball



President George W. Bush has a new best friend - and his name is Bill Gates. Somehow we think they'll be pals for life.

Bush signaled shortly after he took office that he had zero interest in pursuing the anti-monopoly case against Microsoft. Now, nearly 10 months later, the Bush administration just walked away from any serious penalty it may have levied against the software giant.

Victorious, Microsoft remains the most powerful corporation in the world, the most powerful corporation in history. Instead of splitting the company into competing units, the Justice Department will now look for a remedy, i.e., restrictions on Microsoft's business practices, which can only be described as predatory.

Gates figured out months ago that the Bush administration wanted nothing to do with breaking up the monopoly, and he is smiling all the way to the bank. He has long hoped for such an outcome, essentially a negotiated settlement that he can drag out for months, at least until after the release of Microsoft's Windows XP.

The problem with Microsoft is not that it has been successful, but that it has been successful in part by breaking the backs of its competitors through monopolistic practices. The company ties more things to its operating system every day, creating more and more entry barriers for companies like Netscape, which offer similar products. Microsoft has gone so far as to tell smaller software manufacturers that if they do business with a Microsoft competitor, they'll be frozen out.

Although we often think we do, America does not have a purely capitalistic economy. Instead, the nation has long seen fit to keep in place select controls that ensure monster companies aren't formed - companies that could become more powerful than even the people's government. Coercive monopolies - those that are so big they force out all competition - just aren't good for the country.

Now we find out why. No one can take on Microsoft. No company on Earth. And not even the most powerful government on Earth.

Perhaps most mystifying in the Justice Department's decision to eliminate breakup as an option is this: Since no penalties have been negotiated with Microsoft, why has Justice decided to give up its trump card? The government gave up the only leverage it had to a company that has been known to stall, block, outspend and out-wait any obstacle in its path.