Senate sniffs around Microsoft

WASHINGTON -- A leading U.S. senator questioned the impact of Microsoft Corp.'s growth on the rest of the technology industry as part of a Senate Judiciary Committee hearing Tuesday.

The senator, Utah Republican Orrin Hatch, made it clear that Microsoft's competitive practices are being closely watched by various parts of the government.

"The government should not use antitrust law to pick winners and losers in the marketplace. But it should use it to ensure that it is the consumers who get to pick the winners and losers, based on the merits of competing products," Hatch said. "I might add that the difficulty the government has had in getting witnesses to go on the record speaks volumes about the nature of competition in the software industry."

Hatch, who chairs the Judiciary Committee, made his comments during a two-hour hearing. The session featured testimony from antitrust lawyers, technology experts, academics, and small-business owners, and was held mainly as a background session for lawmakers.

While Hatch pointed out that the hearing wasn't meant to be a Microsoft-bashing session, he did question whether the company's power has expanded into an unchecked monopoly in the Internet software market, limiting consumer choice.

Hatch's home state includes Novell Corp., which has seen its share of the networking software market shrink as Microsoft's has increased.

Testimony was mixed on the question of whether Microsoft has overstepped any legal bounds, although most speakers agreed that antitrust law should not be used to stifle technological innovation, even if one company's innovations make its competitors' products seem less attractive.

"It's hard to say that the free-market process has not worked well when you consider the amount of innovation available to consumers in such a short period of time," in Internet products, said Charles Rule, former assistant attorney general in charge of the Department of Justice's antitrust division.

While Microsoft has been phenomenally successful, the company has never been found by antitrust investigators to have monopoly power, Rule said.

The key question in determining whether a company exercises an inappropriate monopoly is whether "other independent innovators have a hard time bringing their products to market," said Joseph Farrell, a professor of economics at the University of California at Berkeley.

Hatch asked those called to testify whether a company which effectively controls the desktop operating system and the software used to access the Internet would violate antitrust laws by moving into media markets, as Microsoft did with its investment in ComCast and its purchase of WebTV.

"What if NBC somehow controlled television sets so that whenever you turned your TV on, you went straight to NBC?" asked Paul Rudden, senior vice president of legal affairs at the American Society of Travel Agents.

The participants were also concerned with the implications of Microsoft's bundling of the Internet Explorer browser with its operating systems. If consumers want to buy a product separately but can't, that could trigger antitrust safeguards, said Kevin Arquit, an antitrust attorney with the Washington law firm Rogers & Wells.