[Congressional Record Volume 144, Number 54 (Tuesday, May 5, 1998)]
[Senate]
[Page S4374]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    INNOVATION AND GLOBAL LEADERSHIP

 Mr. FAIRCLOTH. Mr. President, we talk a lot around here about 
innovation, competitiveness and global leadership. The vast majority of 
us agree that these values are important and worthy of concern.
  Those of us who see the inherent limitations of government know that 
promoting innovation and U.S. economic competitiveness is largely about 
getting government out of the way and letting the free market work its 
will.
  Unfortunately, playing out today is yet another episode of government 
doing things to business rather than getting out of the way. Microsoft 
Corporation, one of America's most successful companies, has come under 
attack by the Clinton Justice Department at the urging of its 
competitors.
  The Justice Department's newly aggressive Antitrust Division is 
waging a slick, media-intensive antitrust campaign against Microsoft. 
The Justice Department claims to be acting in the name of promoting 
competition despite the fact that the computer industry is the most 
dynamic, open and competitive business sector the U.S. has ever 
witnessed. Prices are falling, innovation is thriving and consumers are 
empowered as never before.
  But in their wisdom, Clinton antitrust lawyers and bureaucrats have 
decided that the heavy hand of government will improve innovation and 
help consumers.
  Frankly, I am fearful that this is the government's first attempt to 
begin regulating America's high tech industry. In my opinion, this 
would be a disaster.
  Despite the artful and high-minded rhetoric coming from Clinton 
Antitrust lawyers and their few industry cheerleaders, it is 
inconceivable to me that government regulation will improve innovation 
and consumer welfare.
  And it is clear that the computer industry agrees. On April 30, 1998, 
for example, twenty-six computer companies wrote to Joel Klein, the 
Assistant Attorney General, Antitrust Division, expressing their 
``strongest possible concern'' about the effect on the U.S. economy of 
the government's campaign against Microsoft. The companies who signed 
the letter ranged from such industry leaders as Intel Corporation, 
Compaq Computer Corporation and Dell Computer Corporation, to smaller 
companies such as Insight Enterprises, Inc. of Tempe, Arizona and 
Elsinore Technologies, Inc. of Raleigh, North Carolina.
  I am concerned that, in addition to threatening the freedom to 
innovate and consumer choice, this aggressive pursuit of Microsoft may 
threaten U.S. global leadership in the software and computer industry. 
When Congress crafted the antitrust laws, the world was a different 
place. Most markets were not global. Capital was not mobile. Our focus 
was largely domestic. In today's economy we must concern ourselves with 
the global implications of policy decisions.
  I respect that within clear and narrow limits, basic antitrust laws 
are necessary to preserve free markets. But from where I sit, the track 
record of the Antitrust Division is hardly stellar.
  For example, in 1969 the Justice Department opened a case against IBM 
that lasted 13 years. But by the time the government dropped the case, 
IBM had experienced a serious erosion of its market share at the hands 
of new computer startup companies, including--ironically--Microsoft. 
The marketplace and consumers had their say, not government.
  Mr. President, is this an outcome we want for Microsoft? Is the idea 
to sap Microsoft's vitality through litigation so that its competitors, 
whether domestic or foreign can play catch-up?
  Another case involved the Schwinn Bicycle Company. Once a proud and 
successful American manufacturer of bicycles, it found itself the 
subject of an antitrust prosecution in 1967. The case opened the door 
to foreign companies, and a weakened Schwinn ultimately declared 
bankruptcy in 1992. Again, is this the model for Microsoft?
  Business historian Alfred D. Chandler attributes an antitrust consent 
decree against RCA as precipitating the decline of the U.S. electronics 
industry. The subsequent rise of the Japanese electronics industry is 
now well known.
  The push to regulate the software industry under the guise of 
antitrust law should concern us all. It is government regulation by any 
other name; and like the cases above, will prove shortsighted. Who can 
take comfort in the thought of a federal judge deciding which features 
will go into software products? We have tried this before and no one 
should welcome a repeat.
  America is the leader in software and computer innovation because 
government has stayed out of the way. The creative process and 
innovative genius marked by the software industry is fragile. The heavy 
hand of government regulation, whether direct or at the hands of 
antitrust lawyers and judges, threatens the innovations of tomorrow and 
the U.S. global leadership of today.
  Mr. President, somewhere today, there is a 22 year old, working in 
his garage on a new product. Ten years from now--he or she may be 
America's richest individual. We don't know. But what I do know is that 
I don't want to deny him or her the right to be creative. To start a 
company and to give the big companies a run for their money. But if we 
go down the road of regulating this industry, I am certain that we will 
call to a close a very prosperous era for the U.S. I don't think we 
want our vibrant economy washed away because some people at the Justice 
Department had nothing else better to do with their time.

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