Google Challenges Vista on Antitrust

June 11, 2007
Lexero LLC

 

Microsoft has returned to the antitrust spotlight based on a complaint filed by Google with the United States Department of Justice. The government response to the complaints, however, appears to be substantially less imposing than the Clinton administration’s battle of the late 1990s.

 

First, the “soap opera” reason is that Thomas O. Barnett, a top government official, sent a letter to many state attorney generals urging the AGs to decline to bring antitrust actions against Microsoft as a result of the complaint. The apparent problem here was Barnett’s previous position as a top antitrust partner at the firm of Covington and Burling. Covington represented Microsoft in their previous antitrust matter versus the government. While Barnett never worked on that matter, it is difficult to believe that there were no whispers in his ear prior to his senidng this letter. In any case, most states seemed unswayed by the letter, and some are more seriously investigating the matter on their own.

 

Second, the landscape of the software market has changed in the decade since the last Microsoft antitrust concern. Microsoft was truly dominant in the late 1990s with nearly all end-user computer users relying on Windows. Today, there are numerous differences in the market. Open Source software has become a viable option for most applications, including productivity, web browsing and e-mail. Apple and its OS X has become more of a force and free of charge “user-friendly” Linux systems such as Ubuntu are also real options for end-user consumers for the first time. Google itself competes with Microsoft on software by virtue of its “Docs & Spreadsheets” applications and the Google Desktop.

 

Bottom Line: The questions of government official impropriety aside the changing landscape of the software industry is leading to more relaxed antitrust enforcement environment. While Google’s complaint may have merit, it is unlikely that Microsoft will be challenged by anything other than market forces in the foreseeable future.


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