Sherman’s Antitrust

Whilst approaching the Twenty-first Century, America has taken significantstrides in the advancement of high technology. With the unveiling of this newfrontier comes continued innovation and government regulation.

One aspect of thegovernment in particular, the Sherman Anti-Trust Act of 1890, has impeded theprogress of exploration into this new field; for the effectiveness of governmentis a nefarious hindrance to the efficiency of technology. Thus comes the age oldquestion of who governs and to what ends. As a solution government should adopta more Adam Smith approach to the regulation of high technology; the ShermanAnti-Trust Act should be amended by the legislature to allow more leeway for thetechnological and dynamic computer industry. The result of such an amendment,especially in a world economy such as ours, would allow American computercompanies to thrive and compete with foreign companies as well as lead the wayinto the technological future of the Twenty-first Century.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

In the age of reformas a result of public sentiment, Congress passed the Sherman Anti-Trust Act of1890, named for Senator John Sherman. The one hundred and eight year old ShermanAct forbids monopolizing a market or engaging in any “restraint of trade.”Today “unlawful restraints” fall under three categories: 1) having too largea market share; 2) tying the sale of one product to another; 3) predatorypricing. For the past century the federal government has been pursuing apopulist attack on big businesses–RCA, U.S. Steel, IBM, AT&T, Brown Shoe,A&P, etc.

Most of the companies were ahead of their time and theircompetitors allowing them to become a successful, albeit big, businesses;however, due to government intervention and anti-trust investigation on thebasis of the outdated Sherman Act, many of these cutting edge businesses werehindered in their progress for success. The market became a better trustbusterthan the Department of Justice, maybe even better than big-stick, trust-bustingTeddy Roosevelt. In 1969 the International Business Machines Corp. dominated themarket with a 65% share of the computer industry. As a result of this success,the U.S.

government sued IBM for having too large a market share and demandedthe company be dismantled. As the “effectiveness” of government and theSherman Anti-Trust Act were played out in the courts the advancement oftechnology increased significantly with new companies sprouting up (i.e. Intel,Microsoft).

After the battle between IBM and the Justice Department was droppedin 1982, 13 years later, the fiercely dynamic computer industry had alreadychecked the growth of IBM and the once monolithic enterprise was now headed intotroubled waters. Another prime example is General Motors, who although werenever investigated by the government for anti-trust, always had the fear ofencountering the trust problem if they were too successful. Consequentlyautomobile technology and manufacturing in America remained dormant while theJapanese in the 1980s rocked the American market. The current mammothcorporation under the Justice Department anti-trust microscope is Microsoft.This software oriented company stands accused of tying the sale of one productto the sale of another (Microsoft operating system and Internet Explorer) andpredatory pricing.

The following table illustrates the historic timeline ofMicrosoft verses the United States government. August 1993 The JusticeDepartment begins investigating Microsofts business practices. October 1994Microsoft announces plans to buy Intuit, developer of Quicken, the leadingpersonal finance program. When the Justice Department sues to block theacquisition, Microsoft calls off the deal. June 1995 Court upholds the JusticeDepartment/Microsoft consent decree.

Microsoft agrees not to tie the licensingof Windows to the licensing of other applications, but retains the right todevelop “integrated products.” September 1996 The Justice Department beginsinvestigating Microsofts bundling of Internet Explorer with Windows 95. April1997 Justice Department investigates Micorsofts plan to buy WebTV Networks;later allows deal to go forward. August 1997 Justice Department reviewsMicrosofts investment in Apple Computer.

October 1997 Department charges thatby requiring computer vendors to load Internet Explorer on all systems, Micosoftis in violation of the 1995 consent decree. December 1997 U.S. District CourtJudge Thomas P. Jackson orders that the “tying” of IE 4.0 to Windows betemporarily halted. Microsoft appeals.

On December 11, 1997, Judge Jacksonsruling against Microsoft could forever alter the technological landscape. If theUnited States government were to succeed in its efforts it would establish arisky precedent: governmental meddling in software development. In his testimonyto Congress, Mr. Gates asked members of the Senate Judiciary Committee, “Willthe United States continue its breathtaking technological advances? I believethe answer is yes–if innovation is not restricted by government.” Chairman,Senator Orrin G.

Hatch (R. Utah), and other committee members heard from sixcomputer industry figures on March 3, 1998. Microsoft asserts that Explorer isnot a separate product but an “integrated feature” of Windows–and thus anallowable improvement to the operating system under the consent decree. Byhaving the legislature modify the antiquated anti-trust law to accommodate therapid technological pace two things will happen. The first of which is theefficiency and innovation of the computer industry will be able to run itscourse and reach its full potential with limited government intervention.

Secondly, the effectiveness of the Judiciary in regulating trusts will not becompromised, only shifted to a new arena, one which is acclimatized to thedigital age. Robert Bork, an eminent legal philosopher, points out in his 1978book The Antitrust Paradox, “The general movement has been away from the idealof competition and toward the older idea of protected status for each producer,away from concern for interest groups, and away form the ideal of liberty towardthe ideal of enforced equality.” Hopefully, by amending the current law tostay in tune with our technologically advancing society the opposite of whatBork commented on will be true.