Soft on Microsoft

The decision by the Justice Department to stop pursuing a breakup of Microsoft adds a new twist to a case already a mess of tangles. Depending upon who’s spinning the twist, the latest move represents either a wise move away from unproductive punishment and toward actual remedy for consumers, or it’s just a matter of the Bush administration going soft.

The Justice Department, and the 17 states and the District of Columbia that joined the antitrust suit, contend that dropping their demand that the software giant be broken into three discrete divisions – and also dropping their claim that the company illegally uses its near-monopoly on operating systems to squash competition in the applications field – allows them to streamline the case and to refocus attention on gaining quick relief for consumers who may have been harmed by Microsoft’s business practices.

Critics of the decision, largely consumer groups and other software manufacturers, see it as surrender. By taking breakup out of the picture, the government has given up the most powerful weapon in its arsenal; the best that can be hoped for now is a minimal settlement, inevitably followed by even more aggressive anti-competitive tactics.

Which it will be is now up to the Bush administration. This move is hardly a surprise; as a candidate, President Bush made it quite clear he was “on the side of innovation, not litigation.” Legal reality may make this decision defensible and logical, but the administration should address suspicions that the White House has an unhealthily close relationship with the company.

Microsoft gave $2.5 million to the campaigns of Mr. Bush and other Republicans last year; Microsoft CEO Steve Ballmer met privately in June with Vice President Dick Cheney, although they assert antitrust issues were not discussed; Mr. Cheney’s son-in-law, Phil Perry, is an associate attorney general and oversees Justice’s antitrust division. These factors may not have influenced how the Justice Department is handling this case, but they cannot be ignored.

The best way for the administration to allay concerns about its motives is to follow through on what it says is the most compelling reason for its decision – gaining speedy relief for consumers. Speed is the coin of the fast-changing software realm, so Justice must come forward immediately with tough restrictions on Microsoft’s conduct. Since restrictions are what the administration has chosen over breakup, the public can reasonably assume that the substance of those restrictions and the punitive actions that would follow future violations already have been thought out.