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Press Release

    Tech Bytes- Tid Bits in Tech News: The Spectre of Antitrust

    03/21/2001

    Oral arguments before the D.C. Circuit Court of Appeals concerning the Microsoft antitrust case revealed significant holes in the government’s case. The judges’ overt skepticism of the government’s attempted monopolization and tying cases suggests that the break-up order is dead and that the case may be dropped altogether.

    Unfortunately, even without the proposed remedy, the government’s crusade against Microsoft continues to have a chilling effect on software development. Microsoft is now poised to include Privacy Preference Protocol (P3P) in its upcoming version of Internet Explorer. The P3P platform comes five years after the formation of the Internet Privacy Working Group, which consists of AT&T, IBM, AOL-Time Warner, and Microsoft.

    P3P technology allows consumers to adjust their browsers to conform to their own privacy policy. The browser can be set to block “cookies,” tiny files used to conform Web sites to consumers’ preferences, depending upon whether the cookie was sent by the Web site itself, or a “third-party” such as an online advertiser. Utilizing XML, the browser interacts with the Web site and alerts users to the site’s information policy.

    While most of the P3P technology took some time to develop, Microsoft has had the ability to allow consumers to selectively reject cookies for several months. A similar feature was to be included in Internet Explorer 5.5, but was not because of the specter of antitrust allegations that have haunted the company since the government filed its case in May of 1998.

    When online advertisers learned of Microsoft’s intentions, they immediately admonished Microsoft to refrain from including the feature in IE 5.5. On July 27, 2000, the ten members of the Network Advertising Initiative (NAI) agreed to an industry-wide privacy policy with the Federal Trade Commission (FTC). Microsoft’s new browser would have marginalized the agreement by allowing consumers to decide the privacy issue for themselves. Jeff Connaughton, a lawyer for the firm that negotiated the FTC-NAI agreement, explained that the cookie feature should not be included because, “We should avoid over-broad solutions that undermine appropriate policy solutions we worked hard to develop.”

    To ensure that Microsoft would not include the technology, the NAI raised antitrust “concerns”: Microsoft was attempting to leverage its browser dominance to extend to online content and advertising. MSN.com, the portal owned by Microsoft, would be the main beneficiary of the cookie technology, the NAI concluded, because consumers would be inclined to reject “third-party” cookies from them and accept the cookies from the MSN site. This would expand MSN’s advertising revenue at the expense of net-based third party advertisers.

    The P3P system will accept those third-party cookies, without prompting, if the advertiser conforms to the browser’s P3P settings and allows users to opt-out on their Web site. While many Web companies have signed on to Microsoft’s P3P technology, many have not. In today’s climate, it is likely that businesses that decide the P3P system will hurt their revenue, or provide an advantage to a competitor, will conjure the antitrust spectre to challenge Microsoft’s innovation.

    Nothing is more harmful to consumers than government-sponsored lawsuit abuse. It is a grave misfortune that Microsoft’s software developers have to confront the spectre on an almost daily basis. The D.C. Circuit Court of Appeals should swiftly dismiss the case and send a message to future plaintiffs: consumers benefit most when the competitive technology and software markets end at the courtroom door.