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Press Release

Consumer Group Advises Congress Not to Ignore DOJ's Attempts to Stifle Innovation and Competition

02/25/1999

In a letter delivered to Congress today, Paul Beckner, President of Citizens for a Sound Economy (CSE) Foundation, called attention to recent activities that refute the Department of Justice's (DOJ) antitrust claims, as well as the DOJ's attempts to stifle innovation and competition through their pursuits against Microsoft Corporation.

The text of the letter follows:

"On behalf of the 250,000 members of Citizens for a Sound Economy (CSE) Foundation, I would like to call your attention to some recent activities that all but refute the Department of Justice's (DOJ) claims that Microsoft is acting as a monopoly and is harming consumers.

"First of all, it is hard to claim that consumers are being hurt when prices are plummeting and innovation is booming. CSE Foundation recently commissioned Wirthlin Worldwide to conduct a poll on consumer attitudes towards Microsoft and the DOJ's case against Microsoft. The poll simply confirmed what we believe: four out of five Americans polled (81%) believe Microsoft is good for consumers. The government is just wasting taxpayer dollars pursuing a case that the court of appeals has already rejected. The fact that the DOJ is still pursuing this case should be of concern to policymakers.

"As the DOJ pursues its case against Microsoft, it is becoming increasingly evident that the computer industry represents one of the most dynamic sectors of the U.S. economy. Crucial changes in the marketplace raise important questions about Microsoft's alleged attempts to monopolize the Internet. Significant mergers and business deals have occurred in the information technology sector, as well as the telecommunications sector, that bring new players and billion dollar companies to the forefront of the debate over the competitiveness of the market. The promise of e-commerce, as well as the potential gains from being the consumer's gateway to the Internet have induced major companies to align themselves in ways that offer a direct challenge to Microsoft's current position in the marketplace. Government attempts to control the evolution of this market may ultimately harm consumers by limiting the ability of companies to meet competitive challenges and provide new and innovative products for consumers.

"The activities of the past two months demonstrate just how fast-paced change occurs in the technology industry. For example, America Online's $4.2 billion merger with Netscape Communications will create an aggressive new company with 14 million online subscribers. A related deal with Sun Microsystems offers America Online the potential of gaining a large share of business and corporate accounts as e-commerce and the Internet assume a more prominent role in the global economy.

"High-tech business opportunities have attracted the interest of other major players as well. Telecommunications giants such as AT&T are seeking ways not only to link consumers to the Internet, but to establish a presence on the Internet. The cable television company, Telecommunications Inc. (TCI), which AT&T is in the process of acquiring, offers high speed Internet connections for consumers through the At Home Network. The At Home Network's $6.7 billion acquisition of Excite, the sixth-busiest site on the Internet, gives the Internet access provider a powerful portal to the Internet with sophisticated content development capabilities and 20 million Excite customers. Bell Atlantic and other telecommunications firms are examining similar opportunities to establish a niche in the emerging Internet marketplace.

"The convergence of the telecommunications and information technology industries brings new competitive forces to bear on the Internet and challenges the current position of Microsoft. In addition, alternative operating systems, including the popular freeware Linux, limit Microsoft's ability to behave as a monopolist. To date, activities in this important sector of the economy suggest a market in flux and subject to powerful forces of competition. Consumers have benefited and will continue to benefit from the new products and services produced in the high-tech marketplace. Government intervention into this fray creates new rigidities in a fluid market that may limit the competitive pressures currently driving the market.

"The DOJ and Microsoft's competitors have been talking about the needs of consumers. CSE represents 250,000 real consumers, and even commissioned Wirthlin Worldwide to conduct a poll to help clarify the issue for policymakers. We think the findings support what CSE Foundation has been saying all along. A clear majority of those polled (52%) believe this case is not about "protecting consumers," but rather, it is about helping Microsoft's competitors at the expense of the American public.

"All too often, government policies tend to protect competitors, not competition. Regulation that attempts to enforce a static definition of competition cannot address the gains to be had from a truly dynamic marketplace. The market for information technology is perhaps one of the most dynamic sectors of the economy, and government regulators should not lose sight of the larger competitive forces at play in an attempt to create a "level playing field."

"On behalf of CSE Foundation's 250,000 consumers, I urge you not to ignore the DOJ's attempts to stifle innovation and competition through their pursuits against Microsoft."