[Congressional Record Volume 145, Number 34 (Thursday, March 4, 1999)]
[Senate]
[Pages S2237-S2240]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               MICROSOFT

  Mr. GORTON. Mr. President, last week the Government's misguided and 
collusive antitrust suit against the Microsoft Corporation recessed for 
a much-needed break. It only could be improved by making the recess 
permanent.
  I urge my colleagues to make use of the trial's recess to learn about 
this case, and this industry. Nothing less is at stake here than the 
freedom to innovate, the key to America's economic success. We ignore 
this prosecution at our peril, because the United States Government is 
trying to kill the goose that lays golden eggs in the home states of 
every one of my esteemed colleagues. It is not simply a Washington-
state company that needs shoring up; it is the industry leader that has 
fueled our recent unprecedented economic miracle, created hundreds of 
thousands of new jobs to fill those being lost in other sectors of the 
economy, established America as the global leader in high technology 
and redefined almost every aspect of our lives--and yet is under siege 
by a hopelessly time-locked Department of Justice, whose theory of 
antitrust was shaped in the 60s, when big business was bad, big 
government good, and facts never got in the way of a nice regulatory 
scheme.
  Microsoft is not the only target of this Administration. Intel too is 
under attack by a gaggle of anti-free market attorneys at the Federal 
Trade Commission. The FTC says Intel uses its market power to stifle 
competition in the lucrative chip market. Given recent reports that in 
January, more computers were sold with chips made by one of Intel's 
largest competitors, AMD, than with Intel chips, the FTC's case seems 
far behind the times. But Robert Pitofsky and his cohorts press on 
regardless of real and dynamic markets.
  Holman Jenkins summed up the absurdity of the Administration's 
actions eloquently in an editorial that appeared in the Wall Street 
Journal yesterday:

       If Joel Klein, Robert Pitofsky and all their little 
     acolytes could catch just one mugger, they would have done 
     something of more value for the country. For that matter, 
     we'd owe the mugger a debt of gratitude for distracting these 
     errant knights from their destructive mission.

  Of course, I know the pressures of time and schedules on my 
colleagues, so, of all the millions of words that have been written 
about the Microsoft trial since its beginning last October, I want them 
to note just one story, written February 18 on C-Net news.com about 
Microsoft's recent roller coaster ride on Wall Street. The lead 
paragraph won't take much more than 10 seconds of my colleagues' 
valuable time, but it tells everything anyone needs to know about this 
case:
  ``Microsoft shares fell as much as 3.8% today,'' the C-net story 
began, ``on investor concern about threats to the company's dominance 
from the Linux operating system and the landmark antitrust trial.''
  George Orwell couldn't have put it better: With competitors baying at 
its heels, Microsoft has been forced to divert enormous resources to 
defend

[[Page S2238]]

itself against the government's contention that it has no competitors.
  Actually, George Orwell himself would have rejected the travesty of 
what is basically a private suit brought by the government on behalf of 
competing multi-billion-dollar companies against their chief 
competitor--especially when the government is heavily vested 
politically in those companies' success.
  Whether Orwell would have believed it or not, my colleagues need to 
believe it, because it's happening, and their constituents don't like 
it. A poll taken by Citizens for a Sound Economy in January found that 
81% of Americans--not just Washingtonians, but 81% of all Americans--
say that Microsoft is good for consumers. A Hart/Teeter poll also from 
January found that 73% of Americans echo that belief and fully two-
thirds say the federal government should stay out of the dispute and 
let the marketplace and consumers decide the fate of competitors in the 
personal computer industry. A majority know enough about what's already 
happening in the industry to understand that the whole expensive circus 
is moot anyway: 51% of Americans think that the federal government 
should just drop the case in the wake of AOL-Netscape merger.

  Our constituents are paying attention to this issue because they are 
consumers and are perfectly aware of how much Microsoft has improved 
their lives. They also see family, friends and neighbors working for 
companies that depend on Microsoft for their existence. There are tens 
of thousands of companies, large and small, that partner with 
Microsoft, and they are located in every state in the Nation. I'm sure 
my colleagues know something about them, but I'm not convinced that 
they are aware of their huge numbers. That's why I asked Microsoft for 
a state-by-state breakdown of their ``partners,'' companies that work 
directly with or through Microsoft or its products. Microsoft provided 
me with the data, which I want to share with my colleagues.
  Here, I say to the Presiding Officer the Senator from Kansas with 
1,171 resale partners and 63 technology partners: Microsoft's partners 
fall into many categories: software retail stores; small Original 
Equipment Manufacturers that build and sell PC systems with Microsoft 
software preinstalled; Corporate Account Resellers who resell Microsoft 
software to large corporations; providers who sell packaged Microsoft 
software with value-added consulting services; PC manufacturers; and 
Microsoft Certified Solution Providers.
  I direct my colleagues' attention to this map that shows the number 
of these partners in each of their own states. First, the national 
numbers: Microsoft has 7,279 technology partners and 112,819 resale 
partners.
  These figures represent companies, not employees. Senator Murray and 
I are already well aware of Washington's 2,637 resale partners and 254 
technology partners. Our state's economy is absolutely booming--and 
it's due not only to the presence of Microsoft itself, but to the 
thousands of other companies that Microsoft supports. Companies like 
Technology Express of Bothell and Techpower Solutions Incorporated of 
Redmond.
  But I wonder if my other colleagues have stopped to consider what 
Justice's assault on Microsoft might do to their own state's economies 
and jobs--and how their constituents might feel about that impact. 
Let's look at Utah as an example. Utah is home to 64 technology 
partners and 1,153 resale partners of Microsoft--home to real people 
working in real jobs for real companies. Companies like PC Innovation 
Incorporated in Salt Lake City and Vitrex Corporation of Ogden. Despite 
these facts, the senior Senator from Utah, the distinguished Chairman 
of the Senate Judiciary Committee, has chosen to take the side of the 
Justice Department and to support the Administration's efforts to 
squelch the freedom of companies in his own state to innovate.
  My colleagues should talk with consumers about their views of 
technology, because as my fellow Senators begin to understand how the 
technology business works, they will discover consumers not only have 
not been harmed by Microsoft, but have benefited: Innovation is 
booming, choices are growing, and prices are falling for all software.
  Microsoft is leading an industry that the old school Department of 
Justice just doesn't understand. There are none of the traditional 
barriers to entry in the high tech industry that have historically 
motivated antitrust enforcement. This market moves at the speed of 
ideas--and a good idea can cause a company to lose 90 percent of market 
share overnight--precisely what happened to once-dominant products such 
as WordStar and Word Perfect; precisely what could happen to Microsoft.
  This Justice Department, led by Joel Klein, is brazen about its 
desire to intervene in markets, even when it knows little about the 
markets it meddles with. ``Surgical intervention'' is the spin that 
Klein and his department has coined to describe its interventionist 
approach.
  To recap the recent history of this misguided lawsuit, the original 
charge--that Microsoft illegally tied Internet browsing to its 
operating system--was rejected before the trial even began by a 3-
member Court of Appeals ruling that recognized that putting Internet 
Explorer technologies into Windows '95 was a beneficial integration, 
not a monopolistic tie-in. The Court even admonished Klein and cohorts 
not to try tinkering with software design and warned them to be wary of 
intruding into marketplace innovation and product design. A mere week 
before the Court of Appeals ruling came out, the Department of Justice 
filed its current lawsuit against Windows 98--a product even more 
integrated than Windows 95.
  For this trial, Klein and company simply changed tactics. Instead of 
arguing the case on its legal merits, the Justice Department has 
engaged in an all-out public relations battle. The new PR strategy has 
been orchestrated under Joel Klein's watch and has been the primary 
strategy in the courtroom as well. The government's lead lawyer, Mr. 
Boies has a few aggressive e-mail messages that showed Microsoft to be 
exactly the fiercely competitive entity that has engendered its 
impressive market performance, but nothing more sinister. Mr. Boies 
uses these same pieces of e-mail over and over again in highly 
theatrical ways to try and embarrass and intimidate Microsoft's 
witnesses. At breaks in the trial every day, the Government turns the 
courthouse steps into ground zero for its spin game knowing full well 
its legal strategy had failed before it ever left the gate.
  Despite their shaky legal case, the press has recently reported that 
Justice Department officials and the Attorneys General from 19 states 
suing Microsoft are already discussing post trial ``remedies.'' Before 
any decision has been made in the case, Antitrust Division officials 
are contemplating punishments. Before they have proven any consumer 
harm, they are devising consumer remedies. Before they have made 
closing arguments, they have coined a cute catch phrase for their 
planned breakup of the company. They call the tiny remnants of the 
future broken Microsoft they already have the hubris to predict ``Baby 
Bills.''
  Whatever happened to letting justice take its course? Are we to 
assume that the outcome of the trial is a foregone conclusion? Why are 
we wasting taxpayer money on attorneys fees when all that is really 
going on is a show trial?
  On the other hand, Microsoft has put on a very strong record in this 
case in areas relevant to the law and the claims brought by the 
government: trying law, foreclosure of product through exclusionary 
contracts and the fundamental element of consumer harm.
  The facts so far in the record show Microsoft to be on firm legal 
ground in all these areas. The Appeals Court verified there was no 
illegal tying. James Barksdale, Netscape's CEO, admitted that Microsoft 
did not foreclose his company from the market. And the government's 
final witness, economist Franklin Fisher, testified that, on balance, 
Microsoft has not harmed consumers.
  As Attorney General for Washington State, I argued 14 cases before 
the United States Supreme Court. My focus as Attorney General was 
consumer protection. I want to assure my colleagues today that, had 
this case

[[Page S2239]]

been presented to me as an Attorney General, I wouldn't have given it a 
second glance because there is no evidence whatsoever that Microsoft 
has harmed consumers.
  But Joel Klein doesn't care about protecting consumers. He cares 
about protecting companies that cannot compete on their own. In a 
recent speech, he stated that it was the job of antitrust to 
``reallocate resources between the producer and the consumer.''
  Really? To reallocate resources? That's what antitrust is for?
  Well, I agree with Mr. Klein's assessment on one count: this trial 
was designed precisely to reallocate resources--from Microsoft to 
Microsoft's competitors. And why would the Department want to do that? 
Perhaps because the resources the Administration really wants to 
reallocate are California's electoral votes into Al Gore's column come 
the year 2000. Just this past Tuesday the San Francisco Chronicle said 
that Mr. Gore ``unabashedly acknowledged that he has lavished attention 
on California, which carries a rich cache of votes--and campaign 
donors. According to his staff, the Vice President has visited the 
State 53 times since taking office five years ago.'' In a separate 
story, the Chronicle quotes the Vice President as saying, ``California 
is the biggest, most important State. . . . It deserves the most 
attention, and I'm going to make sure it gets it.''
  So, needing California in 2000, lusting for a return to the 
regulatory excess needed to feed the insatiable maw of big government, 
and wanting to throw trial lawyers some fresh meat, but lacking 
anything closely resembling a credible legal case, what have Klein and 
Co. done? They've demonized the most innovative, extraordinary world-
changing engine for progress that this world may ever have seen. As my 
colleagues think about the implications of our failure to protest this 
demonization, let's just take a closer look at the ``demon'' itself and 
see what innovations the forces of government regulatory mediocrity are 
about to foreclose.
  Microsoft's economic contributions already are common knowledge, and 
I've just provided the State-by-State breakdown, but here's a 
refresher: In the fiscal year ending June 30, 1998, Microsoft's net 
revenues were $14.48 billion--56 percent of which came from 
international trade. In my home State of Washington, by the end of 1998 
Microsoft employed almost 16,000 workers. Nationwide the figure was 
almost 20,000--and that's without factoring in the number of jobs 
represented by the 120,000 plus companies on the Partners' map I've 
just shown my colleagues. Microsoft generates jobs worldwide as well, 
with subsidiaries in nearly 60 countries, from Austria to Vietnam, 
Costa Rica to the Czech and Slovak Republics, Saudi Arabia to South 
Africa.
  National productivity and workplace efficiency? The value provided is 
very nearly beyond our ability to calculate. Ironically, Windows, the 
product portrayed by Klein and cohorts as anti-consumer, was purposely 
designed by Microsoft to support and encourage the greatest number of 
innovations possible by independent software programmers, who need a 
uniform, broad-based platform on which to write code that will be 
economically viable in smaller niche markets. The result has been an 
enormous proliferation of software designed to fill every imaginable 
consumer need.
  How about other, less obvious innovations this company is responsible 
for? Let's start with products that just make life better for ordinary 
people, like WebTV, which lets people use their television sets to 
connect to the Internet. That's innovation for the better. And there's 
also Windows' accessibility features--magnifiers, high-contrast 
schemes, special keys and sound enhancements among many--that make 
computers easy to use for many people with disabilities--opening doors 
that previously were locked tight. Education? Microsoft donates 
millions of dollars in cash and software to schools and libraries every 
year.

  Microsoft was recently voted the 3rd most admired company in 
Fortune's annual poll. That's some demon the Justice Department has 
targeted. It had better hurry and shut Microsoft down completely or the 
next thing you know Microsoft will help lower the cost of computing 
even more or spawn even greater technological and cultural innovations 
that will make our lives easier and better, and then where would we be?
  Mr. President, irony aside, there is no aspect of this case that does 
not offend me.
  As a lawyer, I have nothing but contempt for the flaccid PR case 
hoisted feebly in Judge Thomas Penfield Jackson's court by the 
govenment's inquisitors.
  As a former Attorney General who left a solid legacy of consumer 
protection, I am appalled at the Orwellian double-speak government 
lawyers spew forth as they pretend to act on behalf of consumers while 
simultaneously seeking to dictate what they may consume.
  As a free-market advocate of decades-long standing, I am chagrined at 
the ``Damn-the-consequences-full-speed-backward!'' attitude of those 
who would regulate just for regulation and bureaucracy's sake.
  As a Senator, I am nonplused at the Administration's gall in asking 
for a 16 percent increase to beef up its attack-dog department so that 
it may continue mauling the greatest engine for revenue generation 
we've seen in many a year.
  As a Washingtonian, I am incensed at the blatant attempt of Al Gore's 
wannabe administration to court my state's electoral votes even as his 
current Administration's Justice Department orchestrates the 
destruction of Washington's superb economic engine in favor of Silicon 
Valley's greater financial and electoral prize.
  Yes, this case offends me in every sense of the word, as it should 
offend every one of my colleagues. I call on each of them today to 
recognize what is at risk here, to rise above partisan posturing, to 
recognize the outrageous nature of the Justice Department's power grab, 
and to join me in stopping it.
  Because that is precisely what I intend to do: I will seek to stop 
the Justice Department's grab for more funding through the 
Appropriations Committee when there are basic law enforcement needs 
going unfunded. I intend to conduct Congressional oversight authority 
of the Department's out-of-control antitrust division in every 
committee in which it is appropriate, and I will seek out every other 
legitimate vehicle to provide Congressional control of this out-of-
control, time-warped throwback to the 60s.
  I call on my colleagues to join me today in demanding accountability 
from a Justice Department that asserts consumer harm in the presence of 
consumer bounty; that has sought to destroy competition in the name of 
competition; and that now seeks to increase its own battle force with 
taxpayer dollars for a undertaking that taxpayers do not want 
undertaken.
  This is a Justice Department out of control, and not only with 
respect to Microsoft. They are also going after Visa and MasterCard. 
Their Equally hidebound colleagues at the FTC are suing chip 
manufacturer, Intel, and investigating router manufacturer, Cisco. Most 
of absurd of all the Department of Justice of the United States of 
America has accused the country's leading manufacturer of false teeth 
(Dentsply) of illegally maintaining a monopoly. No wonder Justice is 
asking for more money and more lawyers; it needs to find more teeth to 
feed its rapidly burgeoning lawsuit appetite.
  Mr. President, the Department of Justice seeks to fix what is not 
broken, to intervene where innovation has been the unchallenged king, 
and to shunt off to a dead-end track the principal engine of America's 
technological leadership in the world.
  The Department of Justice, and not Microsoft, must be stopped.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. ROBERTS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Thomas). Without objection, it is so 
ordered.
  Mr. ROBERTS. Mr. President, Senator Kerrey, the distinguished Senator 
from Nebraska, under the previous order has asked for 20 minutes. We 
are to share that time. I ask unanimous

[[Page S2240]]

consent I may be now recognized for 20 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Kansas is recognized.
  Mr. ROBERTS. I thank the Chair.
  (The remarks of Mr. Roberts and Mr. Kerrey pertaining to the 
introduction of S. 529 are located in today's Record under ``Statements 
on Introduced Bills and Joint Resolutions.'')
  Mr. AKAKA addressed the Chair.
  The PRESIDING OFFICER. The Senator from Hawaii is recognized for 5 
minutes.

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