[Congressional Record Volume 141, Number 107 (Wednesday, June 28, 1995)]
[Senate]
[Pages S9315-S9317]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                           ORDER OF BUSINESS

                                 ______


             DEPARTMENT OF JUSTICE AND THE INFORMATION AGE

  Mr. DOLE. Mr. President, 2 weeks ago the Senate took a dramatic step 
toward transforming our telecommunications laws for the 21st century.


                      congress sets telecom policy

  There were many important issues addressed in that debate. But today, 
I would want to hit on one of the bill's main themes. It is simple, but 
important--Congress will not play second fiddle to the courts, or any 
other branch of Government, when it comes to establishing 
telecommunications policy. Despite heavy opposition by the White House, 
I believe the final vote of 81 to 18 clearly demonstrated that Congress 
is now in charge.
  This is not just a simple turf battle. Although, I seem to recall, 
that legislating is a function of Congress, sometimes the courts have 
forgotten this constitutional separation of powers.
  No other branch has greater accountability than ours. Voters have the 
power to elect us, and they have the power to send us home. We serve at 
their pleasure.
  So in effect, when Congress sets policy, it is set by the people. 
Neither the courts nor the executive branch can make that claim.
  That is why I found it so troubling when the courts usurped Congress' 
authority to set telecommunications policy in the early 1980's. Instead 
of the voices of 535 Members of Congress, any judge in the country 
could unilaterally set telecommunications policy. And they have done so 
often, sending conflicting signals.


                          expanding doj's role

  The reason I raise this point is some Members of this body wanted to 
give the Department of Justice the same decisionmaking role as the 
courts. Under existing antitrust statutes, the Department of Justice 
prepares an analysis that it must defend and prove in court. In effect, 
it is the prosecutor. What DOJ wanted in the telecommunications bill, 
however, was to be both prosecutor and judge. Sort of one-stop 
shopping.
  Mr. President, I did not support this expansion of power. To me, this 
was not an issue of whether you were pro-Bell or pro-long distance. 
Instead, I thought it set bad precedent. If we expanded DOJ's authority 
over Bell companies, someone could legitimately ask: ``Why shouldn't 
this so-called one-stop shopping be extended to the entire 
telecommunications industry? And why stop there. Maybe we should give 
DOJ such authority over all sectors of our economy.''
  I do not believe that was the intent of my colleagues who supported 
giving the Department of Justice a decisionmaking role, but what I did 
hear, however, was that many colleagues believed that current antitrust 
standards were not sufficient.


                           an overzealous doj

  Mr. President, antitrust standards are not only sufficient, but it 
seems to me that the current Department of Justice is overzealous in 
its use of these statutes.
  Just take a look at an article entitled, ``Microsoft Corporation 
Broadly Attacks Antitrust Unit'' that appeared in the June 27 edition 
of the Wall Street Journal. It outlines Microsoft's latest problem with 
the Department of Justice's antitrust division.
  More importantly, it sheds some light on how the Department of 
Justice intends to use its antitrust authority to regulate the 
information age. And to me it is frightening.
  The article chronicles Microsoft's latest run-in with the Department 
of Justice and reports that DOJ is considering blocking Microsoft's 
efforts to 

[[Page S9316]]
give customers package deals on certain Microsoft products. The 
specific products involved are Microsoft's updated windows software 
package and its new on-line service.
  Let us understand what is going on here. A company develops a new 
product. A product that consumers want. But now the Government steps in 
and is in effect attempting to dictate the terms on which that product 
can be marketed and sold. Pinch me, but I thought we were still in 
America.
  If somebody makes something and somebody wants it, you sell it. You 
do not have to go to the Department of Justice to get their approval.
  Unfortunately, DOJ does not stop there. According to the article, and 
I quote, ``One of the [DOJ] document requests asks the company to 
produce `all strategic plans prepared by or for Microsoft by any party 
and any documents provided by or to the board or top executives of 
Microsoft concerning predictions as to the future of computers and 
computer technology.'''
  If this report is accurate, DOJ is out of control.
  Let us not forget, however, Justice has gone after Microsoft more 
than once this year. First, there was the accord reached between 
Microsoft and DOJ that Judge Sporkin opposed until the case was taken 
away from him.
  Then there was Microsoft's efforts to purchase Intuit, a maker of 
personal banking software. This fell through after DOJ sued to block 
the deal. According to the Wall Street Journal, before DOJ took 
Microsoft to court, the company had complied with two DOJ subpoenas 
which involved producing 772 boxes of paper and a ``foot-high stack of 
answers'' to DOJ questions. That is right, 772 boxes of paper. 
Bureaucrats gone wild. Imagine all the time and money, not to mention a 
forest or two, wasted on complying with Justice's requests.


                   doj: an equal opportunity meddler

  And it is not just Microsoft that DOJ has been eyeing lately. For 
instance, earlier this year this same Antitrust Division declared that 
a new cellular company by the name of Air Touch was a regional Bell 
operating company. As a result, it would carry all the restrictions of 
a Baby Bell company.
  True enough, Air Touch was a spin-off from the Baby Bell company 
called Pactel. But let us not forget the facts.
  Fact No. 1. Air Touch is not a subsidiary of Pactel, it is a separate 
company.
  Fact No. 2. Air Touch was purchased with money not connected with 
Pactel.
  Fact No. 3. Cellular or wireless services were not restricted under 
Judge Greene's break-up of Ma Bell. As Air Touch is a wireless company, 
how can it have restrictions placed upon it that are not even 
applicable to a real Bell company? It just does not make any sense.
  Now DOJ may believe that Air Touch is a Bell company because it is 
composed of former Bell property. I guess that makes Bell companies the 
modern day equivalent of King Midas--anything they touch turns into a 
Bell company.
  Unfortunately, that line of logic creates a new problem. Bell 
companies have been off-loading all sorts of property to different 
companies in the last decade. Does that make all of these buyer 
companies a Bell company, too?
  The bottom line is that DOJ cannot and has not justified its actions.


                    big government: doj's expertise

  Ironically, this is the same Department of Justice that wanted us to 
give them a key role to play in telecommunications policy, because, get 
this, they have greater expertise than the FCC. I read articles like 
the Wall Street Journal's and I am left wondering: ``Greater expertise 
in what?'' Maybe it's in big government micromanaging business. Or 
maybe it's that they have greater expertise in scuttling new services 
and products. Whatever it is, America does not need that type of 
expertise.


                               conclusion

  Mr. President, if DOJ is able to be this meddlesome under current 
law, just imagine if we had increased its authority under the 
telecommunication bill. Unlike Congress, they have little or no 
accountability.
  That is why Congress--not the executive or judiciary branches--should 
set telecommunications policy.
  Mr. President, I ask unanimous consent that the article which 
appeared in the June 27 Wall Street Journal be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             [From the Wall Street Journal, June 27, 1995]

             Microsoft Corp. Broadly Attacks Antitrust Unit


acting to quash subpoena, firm says it's facing apparent ``harassment''

                    (By Viveca Novak and Don Clark)

       Microsoft Corp., trying to quash a government subpoena 
     related to its new on-line information service, launched a 
     broad attack on the Justice Department's antitrust division.
       In its unusual challenge to the subpoena, the Redmond, 
     Wash., software giant lashed out against the department and 
     belittled the legal theories the agency might use to block 
     the company from bundling access to the Microsoft Network 
     with Windows 95, the much-promoted operating system due for 
     release in late August.
       Microsoft says it ``has been subjected to a series of 
     burdensome document demands . . . that shows no sign of 
     abating.'' The antitrust division ``seems to be doing its 
     level best to hinder Microsoft's efforts,'' it says, and it 
     calls the subpoena ``the latest salvo in what increasingly 
     appears to be a campaign of harassment directed against 
     Microsoft.''
       Microsoft's petition, filed Friday in federal court in the 
     Southern District of New York, asks that the subpoena be set 
     aside. The Justice Department responded yesterday with a 
     motion to strike the petition, setting forth a different 
     version of circumstances surrounding last week's subpoena. 
     The subpoena gave the company only a few days to respond to 
     33 sets of questions and 16 requests for documents, some of 
     them sweeping.
       For example, one of the document requests asks the company 
     to produce ``all strategic plans prepared by or for Microsoft 
     by any party and any documents provided by or to the board or 
     top executives of Microsoft concerning predictions as to the 
     future of computers and computer technology.''
       The two sides even disagree about the date the subpoena was 
     issued; Microsoft said it was Wednesday, while the government 
     asserts Microsoft was given a ``courtesy copy'' two days 
     earlier, with slight modifications on Wednesday.
       William Neukom, Microsoft's general counsel, said that 
     filing the petition was simply a matter of ``protecting 
     ourselves against the consequences'' of missing the 
     government's deadline, since Microsoft didn't comply with 
     Wednesday's subpoena. The government could have asked a judge 
     to impose sanctions on the company.
       Mr. Neukom said Microsoft filed the petition in New York 
     because it was convenient
      to the company's outside law firm and because courts in New 
     York ``have a history of dealing with fast-moving, 
     complicated business transactions.'' Antitrust experts 
     speculated that Microsoft didn't want to file in 
     Washington because the company might draw Judge Stanley 
     Sporkin, whose sharply critical decision against a 
     separate antitrust accord involving Microsoft was recently 
     overturned.
       For its part, the Justice Department contends it was still 
     in negotiations with Microsoft on the scope and timing of 
     delivering the documents when Assistant Attorney General Anne 
     Bingaman received a Friday-morning call from Microsoft's 
     outside counsel ``stating that he was standing in the 
     chambers'' of a district court judge and had moved to quash 
     the subpoena.
       Microsoft acted in bad faith, the department's motion 
     defending the subpoena states, by abruptly terminating ``an 
     established negotiating process.'' Microsoft and a Justice 
     Department lawyer had been negotiating Thursday to narrow the 
     scope of the subpoena, and talks hadn't broken off. The 
     motion asserts that Microsoft's petition concerns a matter 
     that should be worked out between the parties. Microsoft's 
     petition is a ``tempest in a teapot,'' the department says.
       If the Justice Department were to file suit to force 
     Microsoft to remove software for tapping into its new on-line 
     service from Windows 95, Microsoft may have trouble meeting 
     its Aug. 24 deadline to release the product.
       Microsoft is taking an unusual step in filing a copy of the 
     latest Justice Department subpoena with its petition. Many 
     targets of antitrust probes attempt to keep such information 
     requests from becoming part of the public record, since the 
     documents sometimes contain confidential company data or give 
     unflattering hints about areas the agency is investigating. 
     In this case, Microsoft apparently hopes to use the sheer 
     breadth of the department's latest subpoena to bolster the 
     company's case that it is being treated unfairly.
       Microsoft isn't the only company receiving subpoenas with 
     short turnaround times. The department also has issued such 
     subpoenas to competing on-line services, software suppliers 
     and companies that plan to supply content for the Microsoft 
     Network, also known as MSN.
       One major focus of Wednesday's subpoena is the relationship 
     between the MSN and independent companies that will sell 
     goods or information over the new network. That suggests the 
     agency is examining whether the company is competing unfairly 
     with other on-line services in wooing ``content'' suppliers.
       The subpoena asks for the ``full consideration'' paid by 
     Microsoft to each content
      

[[Page S9317]]
     company, for example, and whether Microsoft has exclusive rights to 
     their content. Microsoft has said content companies get a 
     standard split of revenues for their services, and are not 
     required to sign exclusive contracts.
       Another focus is on Microsoft software, dubbed Blackbird, 
     for developing new content offerings, and on whether 
     companies that use Blackbird can develop content for other 
     on-line services. The subpoena also asks for extensive data 
     on projected sales and expenses tied to MSN and other 
     Microsoft products, including Windows 95.
       Last Week, the agency intensified its search for data that 
     might bolster a case that Microsoft's new network might 
     attain market dominance quickly.
       One previously undisclosed source is Pipeline 
     Communications Inc. Among other things, the Atlanta company 
     works for on-line services, offering a speedy way for new PC 
     users to try out those services soon after they turn on their 
     machines for the first time. The Justice Department 
     approached Pipeline early last week.
       According to Pipeline's data, about 60% of the people 
     offered these trial memberships subscribed, said Matt 
     Thompson, Pipeline's president. If that experience carried 
     over to the huge number of Windows 95 users, MSN could 
     quickly dwarf other on-line services, some industry 
     executives said. Dataquest Inc. expects Windows 95 to sell 30 
     million copies in just its first six months on the market.
       Microsoft's petition seems at least partly a bid to elicit 
     sympathy by portraying itself as the victim of intensive and 
     unfairly focused antitrust-division scrutiny since August 
     1993. That's when Ms. Bingaman, the division's head, reopened 
     a Federal Trade Commission investigation begun in 1990 and 
     closed after commissioners deadlocked on whether to bring a 
     case.
       In large part, the petition catalogs Justice Department 
     requests for information. For example, when Microsoft sought 
     last fall to buy Intuit Inc., a maker of popular personal-
     finance software, it gave the department 37 boxes of 
     documents in response to its first subpoena, the petition 
     said. A second department request produced 735 more boxes of 
     papers, plus a foot-high stack of answers to questions, after 
     the request was narrowed in negotiations, according to the 
     petition. The Justice Department sued to block the Intuit 
     acquisition, and Microsoft dropped the deal.
       The subpoena being challenged is the second issued to 
     Microsoft in connection with the current investigation. 
     Another was issued June 5 and demanded a response by June 9, 
     but the department agreed to extend the deadline. Mr. Neukom 
     was in Washington to meet with Ms. Bingaman last week when he 
     learned the department wanted more data.
     

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