News Release

November 4, 2002

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Antitrust Expert Comments on Friday Microsoft Court Decision
Antitrust suit an attempt by disgruntled rivals to use government for competitive advantage

WASHINGTON -- Cato Institute Senior Fellow in Constitutional Studies Robert A. Levy, who has written extensively on the Microsoft antitrust case, issued the following statement on Friday's U.S. District Court ruling:

"Harm to `one or more competitors,' however severe, is not condemned by the Sherman Act in the absence of ... harm to consumers." With those words, federal judge Colleen Kollar-Kotelly pinpointed the driving force behind the Microsoft antitrust suit--an attempt by Microsoft's disgruntled rivals to use government for competitive advantage.

She went on to note that the attorneys general of the nine non-settling states offered "little, if any, legitimate justification" for the remedies they requested, which, for the most part, were "not supported by any economic analysis." Why, she wondered, would the states ask for relief "at this late stage . . . unrelated to [Microsoft's] monopoly market." Her answer: "Certain of Microsoft's competitors appear to be those who desire these provisions."

In effect, nine states tried to replace the United States as the enforcer of federal antitrust laws − seeking broader relief than the federal settlement afforded, based solely on their different view of the public interest. And they undertook that task at the behest of companies like Sun Microsystems, which plays a major role in the high-end server market, and AOL, which dominates Internet access, and Real Player, which rules the market for multimedia software.

All of that whining and political jockeying by Microsoft's giant rivals might be just grist for an intriguing tale of corporate cronyism, except that the cost of the litigation - in time, money, and diversion of executive resources - has been enormous. Microsoft's shareholders suffered an erosion of market value measured in hundreds of billions of dollars. Indeed, Microsoft stock plummeted $80 billion in a single day--April 3, 2000, when Judge Thomas Penfield Jackson issued his mostly-overturned conclusions of law. Contrast that one-day loss with the mere $60 billion that disappeared from investor portfolios as a result of the entire Enron debacle.

Judge Kollar-Kotelly has taken a major step to shut down this unjustified and wasteful litigation. Perhaps now, our nation's most creative entrepreneurs can return to designing the kinds of innovative products that have propelled economic growth.