Bill Gates, Meet Your Adversary, the Antitrust Chief

By Stephen Labaton N. Y. Times News Service | THE JOURNAL RECORD, December 23, 1997 | Go to article overview

Bill Gates, Meet Your Adversary, the Antitrust Chief


Stephen Labaton N. Y. Times News Service, THE JOURNAL RECORD


WASHINGTON -- At work, Joel I. Klein uses Netscape Navigator to search the Internet. At home, he relies on Microsoft's Internet Explorer. The reason he uses different Web browsers, he says, is because the computers at his home and at his office were already loaded with them when they were bought.

That, in a nutshell, is the consumer practice that lies behind the most significant antitrust action to be brought by the government in a generation, a case in which Klein is chief architect as assistant attorney general in charge of the Justice Department's antitrust division.

Two months ago, Klein filed a court challenge to Microsoft's marketing strategy, which required all computer makers who wanted to install the software giant's Windows 95, the world's most popular operating system, to also install its Internet browser. Last week, after winning a court order that forces the company to unbundle the two software programs, he escalated the fight when he asked a judge to hold Microsoft in contempt. He also asked the court to give him the unusual authority to review future Microsoft products to make sure that they are not attempts to corner new markets. For some lawyers and antitrust experts, Klein's decision was the biggest surprise since Microsoft's chairman, Bill Gates, helped bail out his traditional nemesis, Apple Computer, earlier this year. A few months before the case, Klein's confirmation as assistant attorney general was unsuccessfully filibustered by a handful of Senate Democrats who, along with some consumer groups, had complained that he was strong on promoting big business and weak on enforcing antitrust law. Conservative Republicans, on the other hand, endorsed the nomination. Both sides focused on the fact that as the acting head of the antitrust division, Klein had approved Bell Atlantic's $23 billion acquisition of Nynex, creating a new telecommunications behemoth with 39 million telephone lines from Maine to Virginia. "We've got an antitrust fellow here who rolls over and plays dead," Sen. Ernest Hollings, D-S.C., said at Klein's confirmation hearing. Moreover, as the No. 2 official in the antitrust division a year earlier, Klein successfully persuaded other Justice Department officials to refrain from challenging Microsoft's strategy of installing the icon of its online service, the Microsoft Network, in all Windows 95 programs, an effort by the software colossus to promote its network over such rivals as America Online. Officials said Klein had argued that that market was already competitive and that the mere presence of a Microsoft Network icon on the computer screen would not by itself enable the company to leverage its dominance in the world of operating systems into control over networks and Internet access providers. "There was a rumor some months ago that this guy was afraid of the big guys and wouldn't attack them," said Stephen M. Axinn, an antitrust specialist in New York. "Nobody is saying that anymore. These are suddenly becoming the halcyon days for antitrust." What makes the current antitrust fight particularly significant is that the World Wide Web is emerging as the next new platform for global commerce, research and entertainment. Not since the government took on the likes of AT&T and IBM more than a generation ago has the antitrust division issued such a challenge to a corporate titan. In fact, with the decision to prosecute Microsoft, Klein has put antitrust back on the front pages and guaranteed that the division is involved in cutting-edge legal and economic issues in a way that his predecessor, Anne K. Bingaman, had tried, but with less success. "It was right and it was courageous," said Eleanor Fox, a professor of antitrust law at New York University. "He had to make a considered judgment about whether the worst problem is a monopoly or government intervention." Microsoft executives and lawyers see the matter differently. …

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