Tuesday, November 9, 1999

Ruling could mean
breakup of Microsoft

Bullet The issue: A federal judge has indicated he will declare Microsoft to be in violation of antitrust laws in bundling its own Internet browser into its Windows operating system.

Bullet Our view: Any settlement of the case should protect consumers from the practices that triggered the Justice Department's lawsuit.

BILL Gates' Microsoft Corp. has been cruising at the top of the computer industry with such success that an antitrust suit brought by the Justice Department seemed to some a passing distraction. A federal judge changed that perception with findings expected to lead to a ruling that Microsoft is a corporate bully and may need to be broken up to protect consumers.

District Judge Thomas Penfield Jackson's findings of fact have no immediate legal consequence. They do set the framework for his ultimate ruling, unless Microsoft and Justice reach a compromise first. Already Microsoft stock has dropped and investors are pondering their next move.

Microsoft contracts prohibit computer manufacturers who use its Windows operating system from substituting Netscape Communications Corp.'s Navigator browser for Microsoft's own Explorer.

The contracts also forbid the manufacturers to remove from Windows' introductory Internet screen links to sites on the World Wide Web run by Microsoft or its partners.

The Microsoft contract provisions are a form of "tying," which illegally forces consumers of one product -- in this case Windows -- to use another -- Explorer.

Since the Windows operating system dominates the computer industry, the practice would effectively eliminate Netscape's Navigator from the arena. The judge agreed with the government that the contract provisions are harmful to consumers and stifle innovation in the computer industry.

"At the heart of this case is whether a successful American company can continue to improve its products for the benefit of consumers," Microsoft chairman Gates responded in a letter on its web site. Indeed, that may be the case in the short term. However, the government insists -- and the judge agrees -- that Microsoft's tactics will harm consumers, not help them, over the long run.

Gates must direct his efforts to finding an acceptable compromise to settle the case, but his room for negotiating has been limited by the strength of the judge's findings.

To avoid a final ruling that Microsoft is a monopoly, which could trigger other lawsuits, he may have to agree on dividing it into three companies. Windows, office productivity software and Internet commerce have been suggested. Whatever such a settlement includes, the Justice Department should continue to be vigilant in protecting consumer interests in this rapidly changing industry.

Australia keeps ties
to British monarchy

Bullet The issue: Australians voted in a referendum against severing ties with the British monarchy and becoming a republic.

Bullet Our view: The results seemed to reflect opposition to the proposed new way of selecting a chief of state rather than support for the monarchy.

THE British monarch will remain Australia's chief of state following a referendum that rejected a proposal to convert the country into a republic. But it didn't appear that fervor for the monarchy or love of "mother England" had much to do with the outcome. Most Australians think the tie to the British crown is an anachronism.

Rather, many voters were not comfortable with the proposed alternative -- a president appointed by Parliament. The "no" vote of 55 percent was largest in rural areas and working class suburbs, where distrust of Australia's political elite is strong.

In view of the lack of enthusiasm for the monarchy, it appear-ed that the issue of conversion to a republic may be revived if a consensus can be reached on the way chiefs of state are selected.

The issue is more symbolic than practical. Queen Elizabeth II's role is largely ceremonial and usually is performed by the governor-general, who is nominated by the elected Australian government. Elizabeth issued a statement saying the future of the monarchy in Australia "is an issue for the Australian people and them alone to decide, by democratic and constitutional means."

Monarchists called the result a victory for stable government. Prime Minister John Howard was among the those voting "no." Howard said the current system "has helped give this country probably the best democracy in the world."

Most Australians think the queen is a throwback to colonialism. Australia has been independent of Britain since 1901. But like many Commonwealth countries, it still recognizes the British monarch as head of state.

As a result of liberalization of its immigration policy, Australia is no longer populated almost entirely by people of British origin, who might be more likely to support retention of the monarchy.

The sticking point has been finding an acceptable alternative. Supporters of a "yes" vote blamed their defeat on their opponents' success in changing the issue from a simple decision about whether to establish a republic to one about what form it should take.

The tie to the monarchy is essentially a sentimental one. With sentiment waning, it appears to be only a matter of time until Australia severs that tie.

Published by Liberty Newspapers Limited Partnership

Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor

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