Should the computer king be dethroned? A court ruling could change the way Bill Gates does business.

• Author: Lohr, Steve
• Position: Business - Brief Article

Microsoft is a big, rich, and powerful company. Is there anything wrong with that?

In America, a nation with a deep commitment to free-market economics, in which businesses are permitted to operate with a minimum of government interference, we tend to let the winners win. The government rarely steps in to give corporate losers a helping hand, or to restrain the winners.

Yet for a year and a half, the U.S. Justice Department and 19 states have waged a campaign to curb the power of Microsoft, the computer software giant, and it looks as though the government will win.

The government's weapon is a sweeping antitrust suit filed against Microsoft in May 1998. In a preliminary ruling last November, the federal judge hearing the case concluded that Microsoft is a corporate bully which hurt computer users by raising the price of software and limiting consumers' choice of competing products.

Microsoft denies this, as it did throughout the trial in Washington, D.C. From Microsoft chairman Bill Gates on down, Microsoft supporters believe the lawsuit was largely the work of the company's corporate enemies. "They are trying to change the rules of the game in a way, that would be very chilling, very damaging," Gates says.

Microsoft president Steven Ballmer sees Judge Thomas Penfield Jackson, who heard the case without a jury, as an outsider to the high-tech culture. "Nothing of the basic capitalist system that works so well for customers seemed to be" in Penfield's findings, Ballmer says.

The government replies that making sure businesses compete fairly is precisely what the Microsoft antitrust case is about. According to capitalist theory, competition results in better products, lower prices, and more efficient businesses. Capitalism, to be sure, can be a rough game. Think of it as an economic boxing match. The fighters hammer away at each other, and the losers can get hurt. Still, there are tactics that are not permitted. You cannot, for example, punch someone below the belt or bite someone's ear, as Mike Tyson did to Evander Holyfield. Even as rough a sport as boxing needs a referee.

And that is precisely the role that Joel Klein, the head of the Justice Department's antitrust division, says he is performing. "Our policy is very simple: Competition works and it is our job to make sure it is allowed to work," Klein says. "Without a referee, free-market competition will be neither free nor competitive."

ABUSE OF POWER?

The government argues that...