FREE ESSAY ON SHERMAN ANTITRUST IN 21ST CENTURY

SHERMAN ANTITRUST IN 21ST CENTURY

Sherman Anti-trust in the 21st Century
Whilst approaching the Twenty-first Century, America has taken significant strides in the
advancement of high technology. With the unveiling of this new frontier comes continued
innovation and government regulation. One aspect of the government in particular, the
Sherman Anti-Trust Act of 1890, has impeded the progress of exploration into this new
field; for the effectiveness of government is a nefarious hindrance to the efficiency of
technology. Thus comes the age old question of who governs and to what ends. As a
solution government should adopt a more Adam Smith approach to the regulation of high
technology; the Sherman Anti-Trust Act should be amended by the legislature to allow more
leeway for the technological and dynamic computer industry. The result of such an
amendment, especially in a world economy such as ours, would allow American computer
companies to thrive and compete with foreign companies as well as lead the way into the
technological future of the Twenty-first Century.
In the age of reform as a result of public sentiment, Congress passed the Sherman
Anti-Trust Act of 1890, named for Senator John Sherman. The one hundred and eight year
old Sherman Act forbids monopolizing a market or engaging in any "restraint of trade."
Today "unlawful restraints" fall under three categories: 1) having too large a market
share; 2) tying the sale of one product to another; 3) predatory pricing. For the past
century the federal government has been pursuing a populist 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 their competitors allowing them to become a successful, albeit
big, businesses; however, due to government intervention and anti-trust investigation on
the basis of the outdated Sherman Act, many of these cutting edge businesses were
hindered in their progress for success. The market became a better trustbuster than the
Department of Justice, maybe even better than big-stick, trust-busting Teddy Roosevelt. 
In 1969 the International Business Machines Corp. dominated the market 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 demanded the company be dismantled. As the
"effectiveness" of government and the Sherman Anti-Trust Act were played out in the
courts the advancement of technology increased significantly with new companies sprouting
up (i.e. Intel, Microsoft). After the battle between IBM and the Justice Department was
dropped in 1982, 13 years later, the fiercely dynamic computer industry had already
checked the growth of IBM and the once monolithic enterprise was now headed into troubled
waters. Another prime example is General Motors, who although were never investigated by
the government for anti-trust, always had the fear of encountering the trust problem if
they were too successful. Consequently automobile technology and manufacturing in America
remained dormant while the Japanese in the 1980s rocked the American market. 
The current mammoth corporation under the Justice Department anti-trust microscope is
Microsoft. This software oriented company stands accused of tying the sale of one product
to the sale of another (Microsoft operating system and Internet Explorer) and predatory
pricing. The following table illustrates the historic timeline of Microsoft verses the
United States government.
August 1993 The Justice Department begins investigating Microsoft's business practices.
October 1994 Microsoft announces plans to buy Intuit, developer of Quicken, the leading
personal finance program. When the Justice Department sues to block the acquisition,
Microsoft calls off the deal.
June 1995 Court upholds the Justice Department/Microsoft consent decree. Microsoft agrees
not to tie the licensing of Windows to the licensing of other applications, but retains
the right to develop "integrated products."
September 1996 The Justice Department begins investigating Microsoft's bundling of
Internet Explorer with Windows 95.
April 1997 Justice Department investigates Micorsoft's plan to buy WebTV Networks; later
allows deal to go forward.
August 1997 Justice Department reviews Microsoft's investment in Apple Computer.
October 1997 Department charges that by requiring computer vendors to load Internet
Explorer on all systems, Micosoft is in violation of the 1995 consent decree.
December 1997 U.S. District Court Judge Thomas P. Jackson orders that the "tying" of IE
4.0 to Windows be temporarily halted. Microsoft appeals.
On December 11, 1997, Judge Jackson's ruling against Microsoft could forever alter the
technological landscape. If the United States government were to succeed in its efforts
it would establish a risky precedent: governmental meddling in software development. In
his testimony to Congress, Mr. Gates asked members of the Senate Judiciary Committee,
"Will the United States continue its breathtaking technological advances? I believe the
answer is yes--if innovation is not restricted by government." Chairman, Senator Orrin G.
Hatch (R. Utah), and other committee members heard from six computer industry figures on
March 3, 1998. Microsoft asserts that Explorer is not a separate product but an
"integrated feature" of Windows--and thus an allowable improvement to the operating
system under the consent decree. 
By having the legislature modify the antiquated anti-trust law to accommodate the rapid
technological pace two things will happen. The first of which is the efficiency and
innovation of the computer industry will be able to run its course and reach its full
potential with limited government intervention. Secondly, the effectiveness of the
Judiciary in regulating trusts will not be compromised, only shifted to a new arena, one
which is acclimatized to the digital age. 
Robert Bork, an eminent legal philosopher, points out in his 1978 book The Antitrust
Paradox, "The general movement has been away from the ideal of 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 toward the ideal of enforced equality."
Hopefully, by amending the current law to stay in tune with our technologically advancing
society the opposite of what Bork commented on will be true.