There still may be room to intervene in a meaningful way, and I know the government is thinking hard about that. I hope there still is that opportunity. Otherwise, we're going to have to go to a more draconian remedy.

SCHINDLER: In any sense, could this be considered sour grapes by failed competitors?
REBACK: I really don't see it that way. You have to remember the opposition to Microsoft consists of a number of enormously successful companies, in addition to those which Microsoft has run out of business through illegal tactics. It includes consumer groups. It includes powerful and successful United States senators. It really spans the gamut. It includes journalists, for example. It is really hard to imagine that sour grapes animate all of those people. More realistically, there is a great concern on the part of people from every part of the political spectrum that this single entity is going to end up dominating too much of our lives for us to feel comfortable in a free society.

SCHINDLER: What are your expectations for the Senate hearings?

"There still may be room to intervene in a meaningful way. Otherwise, we're going to have to go to a more draconian remedy."

REBACK: I'm not sure. I really fear that the hearings aren't going to produce a lot more light than we have now. I don't think that mechanism may be the best mechanism for getting to the kinds of problems we have here. I might well turn out to be wrong. I hope I am wrong in that regard.

Certainly it is good that senators have considered this issue important enough to invite the participants to appear before them in the public eye. That itself is a tremendous step and an important step. But as to whether we will know more after people are finished testifying than we know now? I'm not sure about that.

SCHINDLER: Do you know which way the Senate Judiciary Committee is leaning?
REBACK: I don't have a clear sense of that. I do know that although people may consider this strange, from the beginning, conservatives were our strongest supporters. Hard to imagine. I have never completely understood why because I try to stay more apolitical myself. I think conservatives have this inherent fear of big government. They have an even greater fear when they understand the power that might reside in a single individual whom they never even got a chance to elect, much less throw out of office. I think that they more readily resonate with our problem. In addition, they are deeply concerned about regulation, and would much prefer an open and competitive marketplace over one that is regulated. They think this marketplace is likely to be regulated unless our antitrust laws are effectively enforced. C O N T I N U E D . . . 2 of 3
SCHINDLER: What's the difference between fierce competition and fair competition?

"I don't know that there is a line between fierce competition and fair competition. There is certainly a line between legal competition and illegal practices."

REBACK: I don't know that there is a line between fierce competition and fair competition. There is certainly a line between legal competition and illegal practices. That line has been fairly well established for a long time under our laws. We have antitrust laws, through the case law and through charges brought by the government. In other cases, we have a pretty good idea of what's legal and what's not. Issues have been up to the Supreme Court several times. Anyone who wants to know the answer to that question -- it's pretty knowable.

Microsoft has been accused twice now by the federal government of engaging in illegal practices. The first time was in 1994, and they copped a plea. They plead no contest. They didn't say we didn't do it, they said "We'll just cop a plea." The government has subsequently come back in the past year and said, "You are still violating the law, and you are violating the agreement you made not to violate the law." That's what's precipitating everything you see now.

SCHINDLER: Isn't it illegal to tie products in two different markets?

"They want to tie the Internet Explorer into Windows is not because they are going to make a lot of money off Explorer, it is because Netscape's product would otherwise pose a competitive threat to Windows."

REBACK: The tying that Microsoft is engaged in is even more pernicious than the type you're familiar with. In a normal tying case, where the tying is illegal, someone is trying to use an existing market position to leverage into a new market, by not letting someone buy products individually, by forcing onto the purchaser products he or she doesn't really want. In this case, Microsoft is engaging in that behavior, but they are doing it for the purpose of maintaining and enhancing their existing monopoly.

The reason they want to tie the Internet Explorer into Windows is not because they are going to make a lot of money off Explorer, it is because Netscape's product would otherwise pose a competitive threat to Windows. Application writers would write to Netscape's Communicator product. That would undermine Microsoft's monopoly. The tying you are familiar with? That's illegal. But the worst kind of tying is the kind that not only extends forward, but also prevents the forces of the free market from eroding someone's existing monopoly. That is the kind of tying that Microsoft is accused of here. C O N T I N U E D . . . 3 of 3
SCHINDLER: It is legal to have a monopoly, as long as it is not illegally obtained or maintained.

"The tying that Microsoft is engaged in is even more pernicious than the type you're familiar with. They are doing it for the purpose of maintaining and enhancing their existing monopoly."

REBACK: There is a lot of debate about what we should do about monopolies. In some cases, we have decided to regulate monopolies, because when the market forces something to be a monopoly, we are not getting the benefits of a free market. The only way to maintain fair prices and innovation in those markets is to have regulation. That is not a preferred approach.

In other cases, we decide that when someone has a monopoly, even if they got it fairly and appropriately -- and in this case, everyone is accusing Microsoft of exactly the opposite -- at that point, our economic system is not working properly. Therefore, when I was an antitrust student in law school, Bill Baxter -- who became head of the antitrust division under the Reagan administration -- suggested that the remedy for that ought to be the ticker tape parade remedy. That when someone achieved a monopoly, we'd have a ticker tape parade for them down Wall Street, and then at the end we'd break up their company.

Having said all that, let's start from the proposition that just having a monopoly, that's OK. But illegally maintaining the monopoly, by, for example, tying, or by withholding information from competitors so that they can make competing products or complimentary products; those kinds of practices most certainly are illegal and prohibited under our law.

SCHINDLER: Do you feel vindicated now that mainstream opinion is coming around to your issues?
REBACK: I was gratified last weekend when I picked up the newspaper and found that Doonesbury had, in three panels of cartoon, described a problem that I'd been searching for a way to describe to lay people for a very long time. I am told that evening on the Simpsons, that they had a segment that portrayed essentially the same problem, of someone trying to do business in competition with Bill Gates.

I don't know that I feel particularly vindicated. I feel that the problem has now struck a chord in the public consciousness as Microsoft has begun to expand beyond the traditional software industry, into journalism and banking and into all kinds of businesses. People are beginning to understand the problems better than they did before.

Personally, there are plenty of days when I think we still have a long way to go. Today is such a day. I don't know if we are any nearer a solution than we were. I think that people have just begun to understand and identify the problem.