Microsoft: without criminal antitrust charges, no threat

The Federal Trade Commission has filed a civil complaint against Intel, and the Justice Department has filed a civil complaint against Microsoft. The common characteristic in each case is the absence of any criminal charge.  No matter what happens, no executive at either company faces the possibility of criminal indictment. Despite the voluminous coverage of these two cases, the profound significance of the absence of criminal charges has gone unnoticed.

ADM and UCAR each paid antitrust fines in excess of $100 million to settle the criminal charges against each corporation.  Their executives were indicted and could face imprisonment.  Their customers sued for treble damages as a result of fixed and inflated prices.  Their stockholders sued for mismanagement.  The lawsuits created corporate chaos.  Moreover, executives feared one another and do not communicate normally since they suspect each other of cooperating with the government. Poor performance and large charges against earnings adversely impacted stock prices.

If the government is successful in its cases against either Microsoft or Intel, and this is a big if, the companies face none of the catastrophes which befell ADM and UCAR.  The worst case scenario is that operational changes will be mandated so that “competition is not stifled”.  These potential operating changes will be negotiated by the parties, and pose far less risk than publically feared.  Because it takes months to negotiate civil settlements, companies are in a far better position to implement the changes without disruption, than when criminal penalties are imposed by the government, and changes are implemented immediately.  Finally, these civil cases are narrowly focused unlike the broad anti-trust suits against IBM and AT&T.