On Monday, April 3, federal Judge Thomas Penfield Jackson finally
issued his expected ruling that Microsoft had illegally "maintained
its monopoly by anti-competitive means," a decision that sets the
stage for the potential break-up of the giant software company.
The very next night, the broadcast and cable networks offered
extensive coverage of the stock market’s nail-biting performance,
after both the Dow Jones Industrial Average and the NASDAQ Composite
swung more than 700 points on Tuesday, a record.
you watched it hour by hour, it was a disaster," said ABC’s Charles
Gibson at the start of Tuesday’s World News Tonight. CBS’s
Anthony Mason called it a "one-day whipsaw," while NBC’s Tom Brokaw
termed it a "bungee jump, a roller coaster ride and a near-death
experience all rolled into one heart-stopping day."
Most network reporters pointed to the usual suspects: inflated
stock values, margin calls, uncertainty over the Federal Reserve’s
next action. On the evening newscasts, only one correspondent --
CNBC’s Ron Insana -- pointed to the government’s pursuit of
Microsoft as a cause for Tuesday’s market turmoil, even though the
plunge in technology stocks had obviously accelerated after
negotiations between the company and government lawyers failed over
"Did the decision against Microsoft have any impact on the
market?" Insana asked on NBC Nightly News on April 4. "It may
have. Investors are worried now about government intervention and
business. They say this could have a chilling effect on the market,
asking whether technological innovation will be stifled in the
For its part, CBS didn’t make any connection between the
Microsoft ruling and the market’s volatility on Tuesday, while ABC’s
Betsy Stark dismissed the notion of a link.
"[Monday’s] plunge in technology stocks could be blamed at least
partly on Microsoft," Stark reported on April 4, "but the
broad-based decline the first half of today, which scorched both old
and new economy stocks, was driven largely by momentum."
That explanation lets the government off too easily, argued
economist Lawrence Kudlow. He noted that Assistant Attorney General
Joel Klein, who heads the Justice Department’s Antitrust Division,
hailed Judge Jackson’s "landmark opinion" which, Klein said, will
"set the ground rules for enforcement in the Information Age."
"Set the ground rules for enforcement? It is exactly these
regulatory attitudes that sent a very cold chill down the spine of
the NASDAQ stock market index, including dozens of company shares
whose CEOs thought they might benefit from Microsoft’s regulatory
and legal demise," Kudlow wrote in an April 5
commentary for CNBC.com.
"Think again, fellas," Kudlow warned. "When Uncle Sam starts on a
trust-busting tear, plenty of unsuspecting victims fall prey to its
anti-market and anti-growth illogic."
"The NASDAQ carnage has been wide-ranging," wrote the American
Enterprise Institute’s James Glassman in Thursday’s Wall Street
Journal. "And why not? The Internet intervention of government,
often in league with trial lawyers, threatens every high-tech firm
NASDAQ investors lost more than $500 billion on Monday and
Tuesday, although gains on Wednesday and Thursday somewhat mollified
the losses for those who didn’t sell. While the Clinton
administration’s pursuit of Microsoft isn’t to blame for all of
those losses, it’s certainly been a contributing factor, as Glassman
and Kudlow argued. Largely as a consequence of the judge’s negative
ruling, Microsoft’s market worth declined nearly 20 percent in four
days, from a close of $106 per share on Friday -- before the
collapse in negotiations -- to just $86 per share when the final
bell rang on Thursday.
For the approximately 2 million Microsoft shareholders, that’s a
loss of value of about $100 billion but, since nearly every mutual
fund in the country has a stake in Microsoft, the losses could
affect tens of millions of people -- and the bleeding could grow if
the government imposes a "remedy" that investors see as damaging to
the company’s long-term profitability.
The Clinton administration has justified its intervention as a
way to help consumers supposedly victimized by Microsoft’s monopoly.
"Today’s ruling makes absolutely clear how important it is to
vigorously enforce our antitrust laws," declared Attorney General
Janet Reno on Monday. "Such enforcement gives the consumers the
benefit of competition."
poll taken after the ruling by Rasmussen Research showed that
consumers aren’t buying the government’s line. The survey found that
67 percent of the public thought Microsoft had been good for
consumers, and more people said the Justice Department’s prosecution
had been bad for consumers (39%) than beneficial (23%), although a
large percentage (39%) were undecided. By a nearly three-to-one
margin (48% to 14%), respondents said they did not want to see
Microsoft broken up by the government.
ABC’s Jack Smith probably had it about right when he reported on
Monday’s World News Tonight that "the [software] industry is
changing in ways that make the present legal face-off look less
relevant....By the time the appeals in this case are exhausted, the
industry may have changed so much, it is not clear if many of the
remedies being contemplated will work or even be necessary."
Most of the recent news coverage hasn’t scrutinized the wisdom of
the government’s continued pursuit of Microsoft. But if there’s only
a slim chance that the benefit to consumers of prosecuting Microsoft
will offset the financial losses to tens of millions of
shareholders, now might be a very good time for reporters to start
asking the Clinton administration some tough questions, before they
ask the judge to impose a "remedy" that does more harm than good.