From: James Love <love@cptech.org>
Date: Wed, 26 Nov 1997 12:54:50 +0800
To: Paul Spirito <berezina@qed.net>
Subject: Re: Microsoft's compelled speech, compelled marketing
In-Reply-To: <19971126012639357.AAB144@antigone>
Message-ID: <347B9F88.7F4D3589@cptech.org>
MIME-Version: 1.0
Content-Type: text/plain



Paul Spirito wrote:
 > Declan,
> 
> All of your examples are of antitrust actions *stopped* by political
> pressure. Of course, monopolies tend to have lots of cash, & that buys
> influence -- but this is just one more reason to bust them: the
> disproportion in economic power within the industry corrupts the
> political system.


    I have worked on several antitrust issues over the past several
years.  My first serious attempt to stop a a merger involved tbe Thomson
purchase of West Publishing, for $3.4 billion.  This involved 2 of the
three large legal publishers (West was number 1).  West publishing was a
privately owned firm.  The largest shareholders were the Opperman
family.  The Opperman family gave Clinton and other democratic party
funds more than $300k during the merger review, directly, and raised
more from third parties.  Vance Opperman had coffee with Clinton and
dinner with Gore during the review.  Earlier Vance had approached
Clinton at a fundraiser to intervene in a Reno antitrust investigation
of West (which was dropped).  The merger was approved, after a
compulsory license and some modest divestitures (we were quite unhappy
with the result).

   We opposed the Bell Atlantic/Nynex merger (we didn't do as much as we
should).  Bell Atlantic has so much capitol hill juice they were able to
hold up Klein's nomination, basically until the merger was approved.

   We opposed the Staples/Office Depot merger, and were quite active. 
This was before the FTC.  Staples launched a very large PR campaign,
with some hill lobbying, but the FTC held its ground, and the merger was
stopped.

   We opposed the Boeing/McDonnell Douglas merger.  Not only did the FTC
permit the merger without any strings (Numbers 1 and 3 in a 3 firm
market with huge entry barriers), but Bill Clinton personally lobbied
the EC to approve the merger, and sent a delegation to Brussels, which
included Joel Klein, the DOJ antitrust head, to argue against
divestiture of the McDonnell Douglas civilian airline business.

    I've worked on other mergers, including  mergers in the railroad
industry, the hospital industry, and the pharmaceutical industry, and I
have been involved in other antitrust issues, such as in attempts to get
the FCC to make cable systems unbundle set top boxes, and create cross
ownership rules between cellular and PCS, and cable and DBS.  In
virtually every case politics played a role.   Typically, the incumbent
firms, or the one that want to merger, have the most influence,
politically.

    Thus, I was surprised to hear Declan say that we thought politics
didn't play a role in antitrust actions against Microsoft.  There are
many areas where politics come into play.  Gore sent his daughter to
work for Microsoft during the DOJ investigation.  Microsoft has rallied
its troops, starting with the Washington state delegation, they have
also picked up players like Vin Weber to talk with Ginrich, and they are
involved in countless other attempts to influence the Congress and the
executive branch.  Microsoft's competitors have been active too. 
Senator Hatch is obviously concerned about what MS had done to Novell
and Wordperfect.  The stakes are high, and there is a lot going on. 
That doesn't mean politics is the whole ball game.  Public opinion is a
big factor, as is the opinion of experts or reasonably informed persons.

   It is generally difficult to get DOJ or the FTC to bring an antiturst
action against anyone.  The Microsoft case is very high profile, for
many reasons.  Now that DOJ is engaged, I would expect them to make
every effort to prevail on the narrow issue before the court.  Who knows
if DOJ will be interested in pursuing the broader issues about MS's use
of the OS to gain leverage in applicaitons markets.  There is a lot
still up in the air. 

  Jamie


-- 
James Love
Consumer Project on Technology
P.O. Box 19367, Washington, DC 20036
voice 202.387.8030; fax 202.234.5176
http://www.cptech.org  |  love@cptech.org