How to Bust His Trust Bill Gates should have to choose between his Windows and our wagons Max Frankel - New York Times Magazine 12/12/99
The judicial finding that Microsoft has attained, enjoyed and abused the power of a monopoly reached me at a fortuitous moment. I instantly knew what punishment fit the crime.
Just a few hours earlier, I had been reading about the tycoon known for "his visionary leadership, his courageous persistence, his capacity to think in strategic terms, but also his lust for domination, his messianic self-righteousness and his contempt for those shortsighted mortals who made the mistake of standing in his way."
Bill Gates, the visionary predator? No. John D. Rockefeller Sr., the "Titian" of Ron Chernow's splendid biography. The parallels are uncanny. Also instructive.
Each man seized upon a product that would shrink the earth and define a century. Each employed it to amass incomparable personal wealth. What refined oil did for Rockefeller, processed information has done for Gates. Both brilliantly appropriated the creativity of other folks. Both used that control to gobble up competitors and to crush all challengers. And when finally challenged in court, both shamelessly denied the undeniable evidence of their monopolistic ambitions and predatory conduct.
All this coincidental instruction in the behavior of Microsoft and Standard Oil left me wondering whether Americans would ever learn to overcome the fateful flaw in our free-market system: the very greed that makes us economically creative also repeatedly makes us creatively criminal.
But I was also left full of admiration for Judge Thomas Penfield Jackson's quick grasp of the world of Windows and ways of the Web. He mastered the intangibles of Bill Gates's vision much sooner than anyone understood old Rockefeller's devilish designs. And the judge's dense, 200-page indictment of Microsoft was devastating enough to evoke Gates's interest in a deal that might yet rescue him from a lifetime of litigation.
I don't know what either Microsoft or the trustbusters of the Justice Department would deem a proper settlement of the case. But I think Judge Jackson should not close the affair until he can reassert an elementary principle of fair commerce: competition can flourish only if the roads to market are equally available to all competitors.
There's no way to test the market value of a dozen eggs if only one farmer owns a wagon to bring them to town. And if every farmer has a wagon, the market still will not work if one of them collects the tolls for use of the road. For foxy old Rockefeller, the road was a pipeline, than a railroad track, from refinery to port, and he conspired to dictate the tolls for all those roads. Inevitably, he not only paid less than any competitor to ship his own oil; in time, he even commanded a rebate - called a "drawback" - from the tolls pair by his rivals.
Decades passed before enough Americans understood how they were being cheated and wrote broad antitrust laws that might protect them against similar betrayals of capitalism. Those are the laws that Judge Jackson now strains to enforce on Bill Gates. But he won't succeed until Microsoft is made to choose between running the wagons and owning the road.
In simpler days, this was sometimes called the "common carrier" rule. If you owned the track, you had to convey everybody's freight fairly. If you owned the wire, you had to connect everybody's phone and carry everybody's message. If you owned a movie house, you had to be available for anybody's films. If you owned a cable, you had to carry all television programs. You could be a common carrier or the creator of something to be carried, but not both.
Simple but also quaint. Technology has a way of overtaking ideology and blurring such distinctions. The cable companies learned to make their own TV shows and to discriminate against rivals. Now the cable owners think they can also become phone companies and the phone companies are angling to send television shows to my computer. And all these wired companies are being challenged by gadgets that send messages and pictures invisibly through the air. What's an egg anymore? Who's a road?
Bill Gates thought his virtual monopoly could never be understood in the old physical terms. And if he had not left a telltale trail of e-mail, the Feds might never have made a plausible case against him. But given the evidence from Gates's own computer, Judge Jackson well understood that Microsoft's imperial triumph had been deliberately and probably illegally engineered.
Gates built Windows, a good road to the information market, and then schemed brilliantly to make it practically the only road that PC owners could navigate. nearly all wagons - computer programs - rode free on his Windows highway, and those of his allies were waved onto low-toll express lanes. Rockefeller rebates redux.
Gates had the market effectively cornered until the Internet produced the prospect of an alternate, Window-less turnpike. Microsoft's long-suffering competitors foresaw a chance of bypassing the personal computer and giving people a much simpler machine that would "borrow" the computing power and programs they periodically need via the Internet.
Belatedly aroused, Gates poured all his monopoly power into blunting that threat. He conspired to destroy rival dreamers, like Netscape, so that his Windows would remain the universal gateway to the Internet. But he was found to have rigged contracts and prices - while plotting to control the Internet - and the remaining question is how best to bust his trust.
The remedy, now as in Rockefeller's time is to make the monopolist choose: Windows or wagons? Gates has already said he wants to keep the road; he wants no deal that deprives him of Windows. Very well; then make him sell of his wagons, his Word and Office programs, and fairly share the Windows specs that competing programmers need to run the wagons on his road.
And then, dear federal trustbusters, please take a look at my cable-TV bills.
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