In part one of our series The Prime Effect, we focused on Amazon’s power as the largest retailer in the world. But of course, it’s not just a retailer. Amazon is a massive technology company, and it’s facing government scrutiny into whether the company’s use of its size and power violate antitrust laws.
MEGHNA CHAKRABARTI: Now, this isn’t the first time the government has asked such questions of a tech company. In fact, one of the most famous antitrust cases in U.S. history involves another tech company headquartered a mere 15 miles from Seattle: Redmond, Washington-based Microsoft. We recently spoke with the litigator the government brought in back in the 1990s for the Microsoft case. His name is …
DAVID BOIES: David Boies.
CHAKRABARTI: Now 80 years old, David Boies is one of the most famous lawyers in the United States. In 2000, he represented then Vice President Al Gore in the Supreme Court case that decided the presidential election.
[ARCHIVAL TAPE] JUSTICE WILLIAM REHNQUIST: Mr. Boies, we’ll hear from you.
[ARCHIVAL TAPE] DAVID BOIES: Thank you, Mr. Chief Justice …
CHAKRABARTI: In 2010, he won a case that overturned the ban on gay marriage in California.
[ARCHIVAL TAPE] DAVID BOIES: I think the most remarkable thing that happened in there was that there was no attempt to defend the ban on gay and lesbian marriage.
CHAKRABARTI: More recently, he’s represented controversial clients such as Harvey Weinstein.
CHAKRABARTI: Back in 1997, Boies was already a sought after litigator. He had just started his own firm when he got a call from then Assistant Attorney General Joel Klein.
BOIES: This was very unusual because the Department of Justice hardly ever retains private counsel to handle their cases.
CHAKRABARTI: Klein wanted to talk about Microsoft.
BOIES: He explained that they were considering possible a monopolization case against Microsoft, and he realized that it would be the largest antitrust case that the government had undertaken since the IBM case many decades ago. And I had represented IBM in that case. And he indicated that he wanted to be sure that no private lawyer did to the government what I had done to the government representing IBM.
CHAKRABARTI: Boies is talking about an antitrust case against IBM that began in 1969. And here’s what Boies did to the government. 13 years, 66 million pages of documents, 974 witnesses and 724 trial days later, the government lost.
BOIES: And he also wanted somebody who knew how to try a complicated antitrust case. And he was not at that point — and I was not at that point — at all convinced that Microsoft had, in fact, violated the antitrust laws in a way that it made sense for the government to prosecute.
CHAKRABARTI: In 1997 …
BOIES: Microsoft was at that point, I think, the largest company in terms of market capitalization in the world.
[ARCHIVAL TAPE] ADVERTISEMENT: Today, Microsoft makes the Internet.
BOIES: Bill Gates was the richest man in the world. Microsoft was one of, if not the most admired company.
[ARCHIVAL TAPE] ADVERTISEMENT: MSN brings the Internet to life right on your Windows 95.
BOIES: And Bill Gates was if not the most, certainly one of the most admired business executives.
[ARCHIVAL TAPE] BILL GATES: The Internet isn’t standing still. I mean, people say, well, OK, aren’t you done adopting the Interweb? Well, the Internet isn’t done changing. And we’re … one of the companies that’s pushing that forward.
BOIES: It was a company that I think had changed the way we operated, the way we thought, both in our personal lives and in our business lives. So it was a company of great interest, great importance to the country, to society.
CHAKRABARTI: After all, Microsoft’s OS was on most personal computers around the world.
BOIES: It was pretty clear to us that Microsoft had monopoly power.
CHAKRABARTI: But Boies says it was less clear if Microsoft had engaged in anti-competitive practices in order to maintain that monopoly. So let’s recall, in 1997, the web is still a pretty new place. You heard Bill Gates say earlier that, quote, The Internet isn’t standing still. Well, Microsoft wasn’t either. It was building for the future. But the government alleged that Microsoft was building walls, modifications to Windows and deals with computer manufacturers and developers that would effectively block the operation of upstart browsers like Netscape on most of the world’s computers. For example:
BOIES: They would enter into arrangements with Apple to get Apple not to use the Netscape browser.
CHAKRABARTI: And that, the government alleged, was an illegal use of Microsoft’s monopoly power.
[ARCHIVAL TAPE] BILL GATES: The DOJ is trying to say that when we put new features into Windows, that maybe we shouldn’t be allowed to do that.
CHAKRABARTI: That is Bill Gates in a 1997 interview with journalist Chris Long. From the get go, Gates rejected the government’s argument. And instead claimed the federal government was interfering with Microsoft’s existential, market-driven need to innovate.
[ARCHIVAL TAPE] BILL GATES: The irony of that is pretty strong. And it’s a pretty fundamental principle for us to be able to add new things into Windows because the operating system, what people expect of it, is always changing. They’ll expect speech in the future. They’ll expect vision in the future. And so we’re just at the beginning of what we need to do there. So we’re being forced to say, although we’re successful, we’re allowed to innovate.
CHAKRABARTI: The Justice Department was undeterred. In fact, the government had already taken action against Microsoft in previous years. In 1995, a court issued a consent decree forbidding Microsoft from using its operating system dominance to squelch competition. Later that same year, the Justice Department alleged that Microsoft violated that agreement and sought to impose a million dollar a day fine on the company. The legal wrangling went on for another year, all the way up to May 18th, 1998.
[ARCHIVAL TAPE] JANET RENO: Today, we are taking another step to keep our marketplace competitive.
CHAKRABARTI: Attorney General Janet Reno announced that the government was taking the world’s largest company to court.
[ARCHIVAL TAPE] JANET RENO: The Internet is already revolutionizing communication, commerce and the flow of information around the world. No firm should be permitted to use its monopoly power to keep out competitors or to spurn innovations.
CHAKRABARTI: Boies says he hoped to settle. Gates didn’t see it that way, saying in 1998, Boies made it clear in the negotiations leading up to the case he’s really just out to destroy Microsoft.
BOIES: No, no, I wasn’t. I had at the time and continue to have considerable admiration for Microsoft and for Bill Gates. It was a misunderstanding of what the antitrust laws are about to say that when you are prosecuted for an antitrust violation, the lawyer for the government is out to destroy you. Every company has got to play by the rules, no matter how successful you are.
CHAKRABARTI: The trial began in Washington on October 19th, 1998. Judge Thomas Penfield Jackson presided.
BOIES: Somebody who in one of our very first pretrial conferences, said to me that I should understand that he did not believe that it was a judge’s role to second guess how technology companies design their products.
CHAKRABARTI: Nevertheless, November 5th, 1999, Judge Jackson issued a ruling that surprised the world.
BOIES: His decision that Microsoft had violated the antitrust laws was a very important decision, not only for Microsoft and the consumers, but for the progress of the antitrust laws and for the analysis as to whether the antitrust laws really could and should apply to individual technology companies, to the high tech industry. The second decision, which was to order a breakup of Microsoft, was in some senses even bolder.
CHAKRABARTI: The breakup of Microsoft never happened, in part because administrations changed in 2000. Boies was involved with that one, too, albeit on the losing side as Al Gore’s counsel in Bush v. Gore.
CHAKRABARTI: So what are the lessons learned from the Microsoft case? The last big monopoly case won by the federal government? Does David Boies think that existing antitrust regulations are suitable in the age of Amazon?
BOIES: First I want to say that I’m really not in a position really to talk about Amazon specifically, my firm has represented Amazon.
CHAKRABARTI: Of course, with a track record like Boies has, no surprise there.
BOIES: But anyway, in addition to that, these cases are very fact specific. You can’t look at a company and say because they’re big, they’re [an] antitrust violate. You’ve got to look at how do they get to be big? How did they keep being big? What are they doing to prevent other people from competing with them? And those are facts-specific. So, you know, if my firm had not represented Amazon, I would be reluctant to sort of give you much of an answer to that.
In this diary … we hear from:
Famed litigator David Boies. We featured him in episode one of our series, The Prime Effect, taking a look at how Amazon is changing the way we shop, live and work.
This article was originally published on WBUR.org.
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