Selected Skirmishes: Texas Swing

The not-so-shocking reason the Lone Star state chose not to sue Microsoft


Journalist Jacob Weisberg stared deep into the heart of Texas–and was shocked. Lone Star State Attorney General Dan Morales had gained notoriety as the leader of the anti-Microsoft vanguard, launching antitrust investigations, filing suit, and organizing a national campaign to inflict mortal legal damage on the alleged software monopolist. But when the Texas-based Dell, Compaq, and CompUSA folks paid him a visit, he curled up like a cuddly little kitty. Morales yanked Texas out of the suit filed on May 18 by 20 other state attorneys general and the U.S. Department of Justice, noting that "several officials of Texas' computer industry have expressed concerns that the filing of a lawsuit against Microsoft may negatively impact their companies as well as the consumers of the state."

Weisberg, who covers politics for Slate, reacted in amazement: "The antitrust case against Microsoft may or may not have merit….But Morales' decision is pretty shocking in any event…the decision should be based on whether he believes the company has violated the law. Instead, Morales openly interpreted his duty as promoting the state's commercial interests."

There is something quaint in the innocence Weisberg exudes, and in his assumption that the enforcement of economic regulations is a pristine, nonpolitical endeavor. But what is truly "shocking" is that a political journalist–one whose column is titled "Strange Bedfellows"–would fail to appreciate the financial interests that, just to pick a random example, would drive a crusading attorney general into the toasty warm bed sheets of a few hot computer magnates.

Political science quiz: Today's category is decision making at the Federal Trade Commission and the Department of Justice (the two agencies have joint jurisdiction for antitrust enforcement). The question is, Which is more important in the merger approval process: 1) a sophisticated economic study prepared by staff economists, complete with extensive industry data, statistical analysis, and tight reasoning, or 2) a scratchy, three-minute cell-phone call from the secretary of commerce?

In 1991, the Time Warner buyout of Turner Broadcasting zipped past the FTC, despite a staff report branding the merger as anti-competitive. After Ted Turner and Gerald Levin, the two CEOs involved, visited top officials in Washington, the commissioners tossed the staff work out the window.

Did they disagree with the competitive analysis? Was it a difference of opinion as to the cross-elasticity of demand? Or were the politically appointed regulators moved by a higher voice?

It would be nice if the pundits who explained our politics to us could see where the politics goes. Most of our government's key decisions are made in meetings like the one Morales had with the computer boys before dropping his suit.

That's what "access," and the campaign contributions used to purchase it, are all about. The chitchat and photo-ops which form the press's interpretation of politics are really just campaigning, and campaigning is to government what the regular season is to the NBA: a very tedious drumroll.

Apparently Weisberg believes that astute government prosecutors can (and should) seal themselves off from grubby business interests, thus removing politics from the process. Cases would be decided only on the merits, not on whose ox is gored–or whether he knows the vice president personally.

There are only three problems with that view. First, it is absurd. Not until the 12th of Never will politicians not talk to the folks they regulate; the chance to cut a deal is why they got interested in this line of work in the first place. Second, private interests will always exercise their constitutional rights to threaten–or cajole–their patrons in high places. Sorry, but that's just America, and we've got a Bill of Rights to prove it. Third, the regulators have to talk to interested parties because they are the ones who actually know what's going on.

Does Weisberg not recognize that the big Microsoft suit has been made possible only through the cooperation of Microsoft's many private sector foes, who have plied the DOJ with juicy memos and cheap data? Is it really a secret that the rulings of all Washington agencies rely almost completely on information provided by private businesses? Or that without such cooperation, the regulators don't have a fighting chance to get anything right?

Here's the kicker: Often, the information is excellent. Take the very example that appalled Weisberg. If the Microsoft lawsuit would actually help make the software market more competitive, the evil corporate lobbyists from Dell and Compaq would have been urging the trustbusters onward. After all, these companies are the world's biggest customers of the monopolist in question. If anything can be done to make operating systems cheaper or more functional, they'll not only show up at the party, they'll bring the beer.

So it turns out that Morales, who was no doubt acting out of political self-interest, was led to do the right thing for the people of his state. That Morales's motives were not pure does not make him an unusual state attorney general. That he lives in Texas, where the Microsoft customers whom the do-gooders purport to help are big enough to frighten the bejesus out of an ambitious public servant, does.

Contributing Editor Thomas W. Hazlett (hazlett@primal.ucdavis.edu) teaches economics and public policy at the University of California, Davis.