Anti-Trust Scrutiny of Microsoft Looks Very Smart in Retrospect

One strange tick I sometimes hear from conservatives is the habit of citing the results of successful government interventions in the economy as an argument against the need for public policy interventions. This often habits in the case of environmental quality, but Casey Mulligan brings it to economic policy today by mocking the Justice Department’s late-1990s antitrust case against Microsoft. His argument is basically that it looks silly to have been worrying about Microsoft crushing rivals when just 15 years later Microsoft is now struggling to get a toehold in the Apple-and-Google dominated mobile marketplace.

But as Dean Baker points out, it’s unlikely that Apple would exist at all today absent the antitrust concerns around Microsoft. At a time when Apple was teetering on the brink of liquidation, Bill Gates teamed up with Steve Jobs to announce both a strategic capital investment in Apple and Microsoft’s commitment to releasing a new version of Microsoft Office for the Mac. The overwhelming conventional wisdom at the time was that Gates was acting in large part to try to assuage antitrust concerns that were very live at the time. If Gates had, instead, loudly announced that Microsoft was killing Mac Office, then Apple might well have gone under. Similarly, absent antitrust issues Microsoft would have been free to more or less guarantee overwhelming browser market share for Internet Explorer and through that for MSN Search. The march of technological progress would still have continued, and our Windows Mobile and BlackBerry smartphones would seem pretty snazzy but we’d very likely have lost out on a lot of beneficial effects of competition.

Long story short, it’s very true that the high-tech industry is full of competition and vulnerable incumbents. But that’s in part because we do antitrust enforcement, it’s not a reason to stop doing it.