A FOOLISH CONSISTENCY IS STILL THE HOBGOBLIN OF ANTITRUST

On Saturday May 20, Microsoft Corp halted its effort to buy Intuit Inc, a transaction that had been valued at $2,000m. The direct cause of Microsoft’s decision was the effort by the US Department of Justice to block the takeover. This is truly a victory for American consumers, said Anne K Bingaman, who heads the Department’s Antitrust Division. Even without Ms Bingaman’s statement, the impact of the deal’s demise was obvious. It is truly a setback for American consumers. The Intuit purchase would almost certainly have led to a new and powerful wave of consumerism in the United States, one made all the more effective by the power and ubiquity of personal computers and inexpensive data communications networks. The combination of a popular personal accounting and bill-paying program with Microsoft’s other offerings would have quickly led to automated shopping by unaided computer users and by intelligent agent programs. This shopping would not only have revolutionised retailing but also forced banks to compete with unprecedented vigour for the resultant transaction processing and associated consumer financing. Microsoft’s decision to abandon its pursuit of Intuit was certainly shaped by the immediate threat of Justice Department action, but there may well have been another, more important reason for the software giant’s climbdown: the general inquiry into Microsoft’s practices advocated by Federal Judge Stanley Sporkin. Had the Intuit purchase gone through, it is doubtful that Microsoft and the apparently sympathetic regulators in Ms Bingaman’s Antitrust Division would be able to avoid a serious and thorough review of business practices in the software trade. Now, with Ms Bingaman lionised in the press and Microsoft posing as a vanquished vulture, there is a much greater likelihood that the critical look at Microsoft advocated by Judge Sporkin will never occur. Not only will the status quo prevail in software, but also in banking and retailing, at least for a while longer.

Plodding dully

However possible the rise of intelligent shopping agents may seem, only the entry of a player like Microsoft would bring it about quickly. But those that feared the shake-up promised by the Intuit acquisition are unlikely to have much respite from their worries. There is nothing in the immediate situation that prevents Microsoft from developing its own products to facilitate shopping and purchasing over its own forthcoming network and over other computer networks as well. Nor is the impact of computer shopping limited to the United States or any other single country market. Just as the home mortgage market in the United Kingdom has long included funding sources from other countries, home shopping in every country will, during the next few years, expand to become a global business. If charge card issuers in France want 20% interest while those in Canada will settle for (and can turn a profit at) 10%, somebody in Canadian banking is going to figure out how to tap into Jacques Bonhomme’s budget. This practice already exists, but its volume is miniscule compared with total charge card revenue. Business people and others that maintain residences in more than one country inevitably move their personal credit facilities to the location that offers the best terms. This individual mimicry of the corporate borrowing habits of multinational corporations will become widespread as quickly as it can become feasible. Microsoft knows this. Bill Gates looks not one step ahead but several and he knows that his future will be brightest if he is on the side of the consumer, even if that puts him in opposition to the business establishment and the government bureaucrats at one with it. Even if Ms Bingaman’s decisions are well-intentioned, as they appear to be, they are misguided. They are the judgements of a government employee plodding dully toward the next US Presidential election, fearful of innovative thinking that might lead to the kind of controversy that costs votes

and campaign contributions. This is absolute corruption, and, more disturbingly, it does not even appear to be deliberate. – Hesh Wiener (C) 1995 Technology News of America Co Inc All rights reserved.