For Immediate Release: April 28, 2000

San Francisco, CA – The case against Microsoft is not about protecting consumers or creating competition. Instead, it helps competitors gain market share that they have been unable to attain by their own merits, according to Trial and Error: The Government’s Case Against Microsoft, a policy briefing released today by the Center for Freedom and Technology at the Pacific Research Institute for Public Policy (PRI).

"Antiquated notions of antitrust law – which have changed little since the Sherman Act was passed in the late nineteenth century – are wholly irrelevant in the self-regulating software market, where companies must either follow the rapid change of consumer preference and innovation or lose out to rivals," stated Helen Chaney, author of the briefing and a research fellow at PRI.

"Monopolists," argues the briefing, are only temporary in today’s high-tech marketplace, where new and better products appear almost on a daily basis. Sun’s Java "write once, write anywhere" language and the advent of web-based software will most likely render Windows obsolete.

Trial and Error argues that the Department of Justice’s proposed remedies for Microsoft are guaranteed to harm consumers. A conduct-restraining remedy could force Microsoft to abstain from folding products into Windows. A vertical breakup of Microsoft would deter the company from bringing innovative products to market at a desirable rate. A horizontal breakup of the company will cause the number of software products to shrink and prices to rise.

"If the Department of Justice decides to do any of these things, an appeals court most likely will, and should, overturn the decision," said Chaney. "If not, both consumers and software companies will suffer as the result of the dangerous precedent the case has set for the software industry – that for any firm with the lion’s share of the market, success is rewarded with nothing short of regulation or dismemberment," she said.

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For more information, please contact Laura Dykes by phone at 415/989-0833 x113, by fax at 415/989-2411 or by e-mail at ldykes@pacificresearch.org, or visit either www.pacificresearch.org.

The Pacific Research Institute for Public Policy is a non-profit organization dedicated to the promotion of the principles of individual freedom and personal responsibility. The Institute believes these principles are best encouraged through policies that emphasize a free economy, private initiative, and limited government. By focusing on public policy issues such as health care, welfare, education, and the environment, the Institute strives to foster a better understanding of the principles of a free society among leaders in government, academia, the media, and the business community.