On January 31, 2000, the Association for Competitive Technology, through its counsel, Wilmer, Cutler & Pickering, filed a court-authorized amicus curiae brief in support of Microsoft Corporation in the government’s monopolization case against Microsoft. The following additional distinguished lawyers signed the brief as "of counsel": The Honorable Griffin B. Bell, The Honorable Nicholas deB. Katzenbach, and Howard J. Trienens.
This package contains four documents: (1) a summary of the principal points in the brief, (2) selected quotations from the brief, (3) the brief itself, and (4) biographical sketches of the principal lawyers.
Using the Court’s own findings of fact, the brief demonstrates that Microsoft did not violate the antitrust laws:
- Microsoft, by creating, continuously improving, and aggressively marketing the Windows 95/98 operating system, benefited hardware manufacturers, software (applications) developers, internet companies, consumers, and competition.
- Microsoft won a share of the "browser" market, defeating Netscape’s ambitions of dominance, by making a superior browser, including it in Windows at no cost, and marketing it successfully to AOL, the most powerful Internet access provider, who reaffirmed its choice even after it had contracted to buy Netscape. The antitrust laws favor such actions.
- Netscape--far from being shut out--more than doubled its "installed base" of users and, as part of AOL, remains a strong competitor. And it will be an even stronger competitor after the AOL - Time Warner merger.
- The market, not the courts, should determine what features should be included in computer operating systems, and which firms should play what roles in making which products.
Contacts:
Lloyd N. Cutler (202) 663-6100
Louis R. Cohen (202) 663-6700 (o); (202)-332-3117 (h)
C. Boyden Gray (202) 663-6888 (o); (202) 337-0792 (h)
Michael L. Burack (202) 663-6029 (o); (301) 320-2423 (h)
William J. Kolasky (202) 663-6357 (o); (202) 625-7336 (h)
PRINCIPAL POINTS MADE IN THE AMICUS CURIAE BRIEF OF ASSOCIATION OF COMPETITIVE TECHNOLOGIES IN U.S. V. MICROSOFT
Association for Competitive Technology
Association for Competitive Technology ("ACT") is a nonprofit association representing over 9,000 companies in the information technology industry. Its membership includes direct corporate and individual members, plus indirect corporate members through other industry associations that have joined ACT. ACT’s membership is made up mostly of small and medium sized businesses but includes household names such as CompUSA, Excite at Home, Intel, Microsoft and Symantec. ACT members come from all walks of the industry including software for Windows and other operating systems, hardware, reseller, consulting and on-line, unified by the cause of protecting competition and innovation in the industry.
Background
Judge Jackson found last year that Microsoft’s Windows holds a lawfully acquired monopoly of the market for "operating systems" for Intel-compatible personal computers. Although Microsoft may later challenge this finding, the brief assumes for purposes of argument that the finding is correct.
The plaintiffs (the federal government and several states) charge that Microsoft, in adding the Internet Explorer browser to Windows and marketing the package, violated the antitrust laws.
The Amicus Brief demonstrates that the purpose of the antitrust laws is to protect consumers and competition, and that Microsoft--far from violating the antitrust laws--competed vigorously to the immense benefit of consumers.
The antitrust laws encourage--rather than condemn--fierce competition
The antitrust laws are designed to protect vigorous (even very hostile) competition, which produces innovation, better products, more efficient distribution of products, and lower prices, all to the benefit of consumers. The antitrust laws do not require competing firms to be nice to one another, or protect firms against their more powerful rivals. It is not wrong for any company to want to take business away from its rivals.
The antitrust laws encourage a firm that holds a lawfully acquired monopoly to compete hard to keep that monopoly. They also encourage such a firm to enter other fields where by competing with better and cheaper products it can benefit consumers.
Microsoft’s actions brought benefits to competition and consumers
Judge Jackson found that the widespread use of the Windows operating system has made it a platform for the vast range of computer applications that consumers now enjoy.
Judge Jackson also found that when Microsoft added a superior internet browser (Internet Explorer) and offered it to consumers at no extra charge, these actions gave consumers better access to the Internet and spurred its rival Netscape to improve the quality of its "Navigator" browser and distribute it at no charge.
Microsoft’s actions were lawful
Microsoft did not drive Netscape’s Navigator out of the browser market. On the contrary, Judge Jackson found that Netscape’s "installed base" has more than doubled since 1995 and will continue to grow in the future. Browser competition remains vigorous.
Microsoft did successfully break into the browser market and obtain a share of that market for itself. The single most important reason, as Judge Jackson found, is that Microsoft rival AOL chose and re-chose Internet Explorer over Navigator (even though AOL now owns Netscape). AOL made that choice because Microsoft offered a better product, better service, and better marketing support than Netscape did.
Microsoft’s agreements with PC manufacturers and Internet access providers to distribute Internet Explorer were lawful agreements designed to help Microsoft break into a browser market in which Netscape was the overwhelmingly dominant firm. It was good, not bad, for Microsoft to introduce competition in that market.
The plaintiffs’ theory is essentially that Microsoft, once it had a lawful monopoly in the operating systems market, should not have aggressively entered into the browser market, because Netscape’s dominance of that market might have led to more competition in operating systems. That theory is bad law: the law protects consumers, not competitors. Consumers benefit when any firm, including one holding a lawful monopoly, competes aggressively to challenge another firm’s incipient monopoly in a related field.
Judicial intrusion now into the computer software market would be bad public policy
Microsoft is a large and powerful company, but it faces aggressive present and future competition in every field it enters, and if it wants to maintain its present position it must compete vigorously, with innovations, improved quality and lower prices, on every front. That is exactly what antitrust policy seeks to promote.
For a court to enter into this vitally important and rapidly changing field and seek to dictate what products shall be made and sold by which firms would be a tragic mistake. For example, if a few years ago a court had ordered Microsoft not to add Internet Explorer to Windows, there would today be fewer hardware manufacturers, fewer software developers and far fewer applications, and a far less developed Internet, and the world would be a poorer place.
SELECTED QUOTATIONS FROM THE BRIEF OF ASSOCIATION FOR COMPETITIVE TECHNOLOGY
Antitrust Policy
"The antitrust laws assume that firms, including lawful monopolists, will behave selfishly: the theory is that encouraging them to use industry, skill, and any inherent advantages to defeat their rivals will promote consumer welfare and economic progress." (Page 4)
"A monopolist is not expected to pull its punches; on the contrary, the concern is that its monopoly position will enable it to stop punching hard." (Page 7)
Microsoft’s Conduct
"Microsoft embraced the Internet nimbly and effectively . . ." (Page 41)
"The steps that Microsoft took, starting from far behind Netscape, to enable Internet Explorer to obtain its present market share were procompetitive, not anticompetitive: Microsoft improved quality, offered Internet Explorer at no additional charge, entered into highly efficient distribution arrangements, provided valuable technical support to independent software developers, and integrated Internet Explorer functionality more fully into Windows. Each of these steps was exactly the kind of vigorous competitive challenge that the antitrust laws encourage, especially from new entrants to a market dominated by another firm." (Page 5)
"Microsoft’s actions were the actions of a firm running hard to keep its lead in a fast and unpredictable race, not the actions of a secure monopolist able to hide from competitive forces behind a protective wall." (Page 42)
The Effect on Consumers
"Microsoft challenged Netscape’s dominance by making Internet Explorer a better browser, offering it as part of Windows at no additional charge, and aggressively distributing it. Microsoft thereby benefited consumers not only directly but also indirectly, by forcing its rival, Netscape, to make Navigator a better and cheaper product than it would otherwise have been." (Page 10)
Effect on Netscape
[I]f Microsoft’s objective was to foreclose distribution of Navigator, it failed spectacularly." (Page 11)
"[A]lthough Navigator’s market share declined, Navigator’s installed base more than doubled over the relevant period: from 15 million users in 1996 to 33 million users in December 1998 in the United States alone. The Court further found that, far from being foreclosed from the browser market, ‘[b]y all indications, Navigator’s installed based will continue to grow.’" (Page 11, quoting Findings 378)
"If Microsoft ceased competing vigorously, while Netscape continued to do so, Netscape could win back market share and once again be poised to become the ‘standard’" (Page 12)
The AOL "Coup"
"More than any other single event, Microsoft’s ‘coup’ in defeating Netscape to become the browser for AOL’s flagship online service gave Internet Explorer a significant share of the market and ‘contributed to extinguishing the threat that Navigator posed to the applications barriers to entry.’" (Page 15, quoting Findings 304)
"Microsoft won the competition to become AOL’s preferred browser fair and square." (Page 15)
Microsoft overcame AOL’s initial preference for Netscape "by offering AOL a superior technology that better met AOL’s needs, by promising significant engineering and technical assistance and a precise timetable for product improvements, and by agreeing to place the AOL icon on the Windows desktop despite the potential impact on MSN [Microsoft’s competing online service] . . . It would be hard to conceive of a better example of competition on the merits." (Page 16)
The Government’s "Bundling" Claim
"Microsoft had the legal right to improve its windows product by integrating browser functionality into it; adding that functionality provided important consumer benefits so that the integration was not a mere ‘bolting together’ of two products, and cannot have been unlawful." (Page 17)
"[I]t would be a tragic mistake for a court or government agency to dictate who should make or market which products, or what functionalities each product should have." (Page 3)
"If a few years ago a court had ordered Microsoft not to incorporate browser functionality into Windows, the whole world would today be a poorer place." (Page 3)
Java
"Microsoft’s actions in relation to Java were procompetitive: they benefited consumers by giving software developers superior tools for writing new applications programs to run on PCs that use Windows." (Page 38)
Conclusion
The essence of the government’s case is their "convoluted theory" that "Microsoft would not have engaged in costly competition in the browser market ‘but for’ its desire to maintain the ‘applications barriers to entry’." (Page 42)
"The growth of the Internet was certain to fuel demand for PCs generally, resulting in increased sales of Windows and every Microsoft software product. . . . [I]t is frankly preposterous to say that Microsoft’s investment in a high quality browser that contributed to the growth of the Internet and the creation of an entire industry in which Microsoft sold many products was justified and repaid only by its contribution to maintaining the ‘applications barrier to entry.’" (Page 43)
"Protecting one firm’s lawful monopoly (Navigator) from competition in hopes of eroding another firm’s lawful monopoly (Windows) would be bad economics, bad policy, and bad law." (Page 44)
Wilmer, Cutler & Pickering
Lloyd N. Cutler
is senior counsel to Wilmer, Cutler & Pickering and one of the firm's founders. Mr. Cutler served as Counsel to both President Clinton and President Carter. In and out of government, he has written frequently and appeared often on television as a commentator and advocate in connection with a wide range of public policy matters.Louis R. Cohen
is a partner of Wilmer, Cutler & Pickering. He specializes in U.S. Supreme Court and other appellate litigation. He left the firm in February 1986 to serve as Deputy Solicitor General of the United States, and returned to the firm in July 1988.C. Boyden Gray
is a partner of Wilmer, Cutler & Pickering. In 1981, Mr. Gray left the firm to serve as Legal Counsel to Vice President George Bush. He also served as Counsel to the Presidential Task Force on Regulatory Relief, chaired by Vice President Bush. Mr. Gray later served as Director of the Office of Transition Counsel for the Bush transition team, and as Counsel to President Bush from 1989-1993. He returned to WCP in 1993.Michael L. Burack
is a partner of Wilmer, Cutler & Pickering. Mr. Burack has a general litigation practice with a focus on high-tech industries. He has litigated cases involving Internet regulation and antitrust in high-tech markets.William J. Kolasky
is a partner of Wilmer, Cutler & Pickering. Mr. Kolasky is Co-Chair of the firm’s Antitrust Practice Group. Mr. Kolasky has taught antitrust law at the Washington College of Law at the American University and writes and speaks regularly on antitrust issues. He is a member of the council of the American Bar Association Section of Antitrust Law.Of Counsel
The Honorable Griffin B. Bell served as Attorney General of the United States in the Administration of President Jimmy Carter from 1977 to 1979, and as a Judge of the United States Court of Appeals for the Fifth Circuit from 1962 to 1977. He is presently a partner in the law firm of King & Spalding.
The Honorable Nicholas deB. Katzenbach
served as Attorney General of the United States in the Administration of President Lyndon B. Johnson and later as Undersecretary of State. Mr. Katzenbach was Senior Vice President and General Counsel of IBM Corporation and oversaw the defense of the government’s monopolization case against IBM, which the Justice Department eventually dropped in 1982.Howard J. Trienens
is a partner in the law firm of Sidley & Austin and was formerly Senior Vice President and General Counsel of AT&T. He is the principal outside counsel for Association for Competitive Technology.This letter is for general informational purposes only and does not represent our legal advice as to any particular set of facts, nor does this letter represent any undertaking to keep recipients advised as to all relevant legal developments.
