South Carolina today withdrew from the antitrust lawsuit filed against Microsoft last May by a group of U.S. states and the Department of Justice, citing the planned merger of America Online and Netscape and their partnership with Sun as an example that "competition is alive and well."
South Carolina Attorney General Charlie Condon released a statement today that said, in part, "Recent events have proven that the Internet is a segment of our economy where innovation is thriving. The merger of AOL with Netscape and the alliance by those two companies with Sun prove that the forces of competition are working. Further government intervention or regulation is unnecessary and, in my judgment, unwise." South Carolina was one of the 20 states that joined the Justice Department in the antitrust lawsuit against Microsoft, now in its eighth week.
Microsoft itself had argued inside and outside of court that the AOL-Netscape-Sun deal undermines the government's case. Microsoft attorneys claimed that the $4.2 billion merger and related alliance with Sun announced Nov. 24 showed that Microsoft hasn't stifled competition in the industry.
Condon said he can "no longer justify our continued involvement or the expenditure of state resources on a trial that has been made moot by the actions of the competitive marketplace." He said he was also influenced by Nobel prize-winning economist Milton Friedman who has said that expanding government control over the technology industry would lead to fewer innovations, higher prices and lower profits.
The government's case has focused on Internet competitors, not consumers, with witnesses being either Microsoft rivals or paid government experts. "Consumers have not taken a leading role in this action," he said in his statement. "That's because there are no monopolies on the Internet."
The information technology industry is one of the country's "great economic success stories," Condon continued. "It has achieved its current rate of growth and prosperity without the aid or the interference of government. Competition is alive and well. Surely the Netscape-AOL-Sun deal has proven that beyond all doubt...innovation should be left to entrepreneurs, not to government bureaucrats or the courts."
A Microsoft spokesman said the company was happy to hear about Condon's decision.
"We are pleased with the news and hope other states will follow the lead of South Carolina," said Tom Pilla.
A Justice Department spokeswoman did not immediately return a call seeking comment.
(Elizabeth Heichler, managing editor of the IDG News Service in Boston, contributed to this report.)
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From IDG.net.
