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American Morning

Microsoft Resolution Widely Disagreed Upon

Aired September 07, 2001 - 09:20   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JEANNE MESERVE, CNN ANCHOR: The Bush administration's decision not to break up Microsoft is generating mixed reaction. Critics accuse the government of giving in to big business, others argue the decision will help resolve the long running lawsuit. Officials say there was no involvement from the White House.

Joining us to debate the decision, Bob Levy of the Cato Institute, and Jason Mahler of the Computer and Communications Industry Association. Thanks a lot for joining us.

Mr. Levy, let me start with you. Was this a good decision or a lousy one on the part of the Justice Department?

ROBERT LEVY, CATO INSTITUTE: It's actually a nonevent. It was no surprise that the Justice Department wouldn't be pursuing a breakup remedy, effectively a court of appeals threw that remedy when it issued its opinion. The tying claim, the Justice Department will get all it wants on the tying issue under the monopoly maintenance claim, there was no purpose in pursuing a redundant claim seperatly.

So, I think this is a nonevent. The stock market treated it as a nonevent. Microsoft's stock was actually down about three percent yesterday in the face of about a two percent decline in the overall averages.

What we really have to fear now are the conduct remedies that the Justice Department apparently plans on trying to effectuate. Those can be very destructive for consumers.

MESERVE: Mr. Mahler, a nonevent? Do you agree with that assessment?

JASON MAHLER, COMPUTER & COMM. INDUSTRY ASSN.: Actually, it may not surprise you, I have quite the opposite view. For us it was very much surprising. We -- in the wake of a unanimous circuit court holding, agreeing with the two previous district court judges who had looked at this issue, all in essence saying that Microsoft is a monopolist, has committed serious acts that violent our antitrust laws. And this was only two months following that decision, and it was a unilateral action by the Justice Department to do this.

It seems quite puzzling to us at this point in time that they would be retreating from their previous position, which was that a structural remedy was the most effective remedy which would have effect of restoring competition to the marketplace.

MESERVE: But, Mr. Mahler, you know the Justice Department says this wasn't a capitulation, they still are going to seek remedies. Do you have confidence that those remedies will work, from your perspective?

MAHLER: We have serious reservations as to whether behavior remedies can in fact restrain Microsoft. They have demonstrated time and again that pattern of evading and ignoring, in fact, conduct remedies which were designed to address previous violations of antitrust law.

And we tend to think they have the same attitude now. They certainly are demonstrating it with their upcoming operating system, XP, which perpetuates and extends many of the same violations which have been occurring for several years now.

MESERVE: Mr. Levy, what do you think about the impact of all of this on consumers? Will there be one? Will there be availability of more products? Will costs go down?

LEVY: A lot depends on what the Justice Department ultimately gets. If they get what they're looking for, the effect on consumers is going to be deleterious.

If the Justice Department succeeds in getting Microsoft to disclose its source code, for example, we will have destroyed, wiped out virtually overnight, the major advantage that Microsoft offers, which is standardization. And that's going to mean vulcanization of the operating system, fewer applications, higher cost of development, higher prices for consumers, more complexibility.

All for which we have done is transformed the antitrust laws into a corporate welfare program for Microsoft disgruntled rivals.

MESERVE: Bob Levy. Jason Mahler. Thank you both, an obvious disagreement there.

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