Bush's Expected Choice For Antitrust Division Touted Microsoft's 'Consumer Benefit'

By Christine Hall | July 7, 2008 | 8:19 PM EDT

(CNSNews.com) - While the Justice Department's trust busting case against Microsoft proceeds on appeal, President Bush is expected to nominate a new antitrust chief who may let the whole matter die a quiet death. Charles James, who served as acting chief of the antitrust division at the end of the George H. W. Bush presidency, has signaled that he thinks Microsoft offered a product that was good for consumers.

"One thing that is very, very clear is that consumers have benefited by there being a common [software] platform," James said last year in a CNBC interview. "If Microsoft were to be broken up, you would see divergence of that common platform," he said.

In a television interview Tuesday, Microsoft chairman Bill Gates skirted questions concerning the federal government's ongoing litigation against his company and declined to say whether he is pleased that he's dealing with a Bush Justice Department, rather than one controlled by failed Democratic presidential candidate, Al Gore.

Bob Levy, a senior fellow with the Cato Institute, says Bush's nominee is likely to mean good news for Microsoft. "When he said that consumers have benefited, [and] presumably that's the overriding purpose of the antitrust laws ... then it's very difficult to come up with the conclusion that the antitrust laws have been violated in any manner that calls for a very severe remedy," said Levy.

"One could come to the conclusion that there are some violations that could be rectified without going so far as to destroy the common platform," he said.

"That brings up the question of negotiating some sort of deal," said Alan Reynolds, director of economic research for the Hudson Institute. "If the appeal goes as well as I think it does for Microsoft, the deal isn't going to be much more than a wrist-slapping," he said.

But things still won't be the same, according to American Enterprise Institute resident scholar Tom Hazlett, who co-authored a study on how the government's case against Microsoft has impacted the stock market.

"My co-author and I looked at stock market reactions and looked at how companies that presumably would benefit from any good antitrust action to limit the Microsoft monopoly," said Hazlett.

"It turns out that those share values do not respond positively to the announcements about the Microsoft case moving forward," he said. Conversely, when Microsoft won a major antitrust ruling in 1998, both Microsoft and the Nasdaq were up, said Hazlett.

According to Hazlett, much has been lost already. The high-tech Nasdaq firms that the Clinton Justice Department and its allies claimed were hurt by Microsoft's alleged uncompetitive practices saw their stocks plummet as the Justice Department scored at the expense of Microsoft, he said. That has amounted to hundreds of billions of dollars in losses by Hazlett's count, which means less capital for entrepreneurs to put towards research and development of new products.