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  Judge Is Skeptical Of Threat to Microsoft

By Rajiv Chandrasekaran
Washington Post Staff Writer
Wednesday, June 23, 1999; Page E2

Drawing an analogy to a mom-and-pop grocery store's futile efforts to compete with a "megamart," the federal judge presiding over the Microsoft Corp. antitrust trial voiced skepticism yesterday about the software giant's contention that it faces stiff threats from upstart rivals in the computer industry.

In an extended colloquy with Richard Schmalensee, a Massachusetts Institute of Technology professor who is appearing as Microsoft's final witness in the proceedings, U.S. District Judge Thomas Penfield Jackson questioned whether the megamart -- a not-so-veiled reference to Microsoft -- could simply use its size to squash smaller competitors.

Jackson launched into the discussion after Schmalensee had argued that just because Microsoft's Windows operating system is so popular doesn't mean another firm can't develop a rival operating system. "That's like saying I have a grocery store and you don't -- and that makes it hard to compete with me in groceries," Schmalensee told the judge.

The government contends that Windows has become so ubiquitous that it is unlikely to be toppled by a competitor any time soon.

"I have trouble with your grocery-store analogy," the judge told the witness.

Jackson then launched into his own comparison. "While your competitor is building his little neighborhood store, you are building a supermarket and your competitor has fewer and fewer customers because they are looking for products in your megamarket and your competition is always trying to play catch-up," Jackson said.

Schmalensee eventually told the judge that if "consumers freely choose the megamart" because it has lower prices or more products, "they're better off."

The judge questioned whether the megamart should then be considered a "benevolent despot or a monopoly" -- the latter label being something Microsoft is fighting hard to avoid in court.

Schmalensee argued that "you don't rely on the baker's benevolence to get your bread. . . . If a firm begins to think like a benevolent despot, it will have a short reign."

© 1999 The Washington Post Company

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