Micro$oft Monitor

Published by NetAction Issue No. 27 April 13, 1998
Repost where appropriate. See copyright information at end of message.


The Microsoft Threat to Electronic Commerce
About Micro$oft Monitor

The Microsoft Threat to Electronic Commerce: DoJ Won the Intuit Battle, But Microsoft Could Win the War

NetAction has just released an in-depth report that reveals how important antitrust enforcement is to assuring vigorous competition in the emerging online financial services marketplace.

The complete report is available on NetAction's Web site, at: http://www.netaction.org/msoft/finance/.

The report describes how the Justice Department's 1995 opposition to the proposed Microsoft-Intuit merger opened the door to industry competition and ultimately resulted in the emergence of an open standard for electronic banking protocols. But continued vigilance by the Justice Department is necessary because Microsoft continues to use its financial and technological power to establish a monopoly in online financial transactions.

Project Director Nathan Newman, who wrote the report, notes that if Microsoft is successful, it could ultimately gain control of the economic lifeblood of Internet commerce.

The report, "The Microsoft-Intuit Merger: The Intervention that Worked and the Dangers Today from Microsoft's Monopoly Practices in the Online Financial Marketplace," also examines Microsoft's more recent attempts to monopolize Internet banking.

Newman points out in the report that people who criticize the Justice Department for investigating Microsoft need to understand that the government's 1995 intervention is the reason we have open competition today in online financial transactions.

The white paper explains how the government's intervention made it possible for new competitors to enter the online financial marketplace, and at least gain a foothold in some of the markets that Microsoft was attempting to monopolize. Although Microsoft had sought to control the standards of online commerce through its merger with Intuit, the Justice Department's opposition killed the proposed merger and forced the company to compromise with competitors in building core open standards into the online financial economy.

Unfortunately, Microsoft's increasing dominance of corporate computing and Internet technology has led to a renewed monopoly threat in the world of online financial transactions. Microsoft is inserting its Internet servers into most online financial transactions. With its growing control of the Internet browser market, Microsoft is not only in a position to direct customers to its Internet sites, it can direct consumers to the financial services from which it gets a commission.

The most serious threat is that Microsoft is building a partnership with First Data Corporation in an effort to replace the role of banks in processing online bills that were previously mailed to customers by credit card companies, utilities or other merchants. The danger is that rapid, unregulated changes in the financial world can have dire economic results, Newman warns in the report.

NetAction's report argues that government intervention now, oriented toward promoting open competition and economic equity, will negate the need for much broader, more expensive intervention, in the coming years.

Contact Nathan Newman at for more information.

Want to help NetAction ensure vigorous enforcement of antitrust laws against Microsoft? Here are two ways you can help:

Additional information about NetAction's Consumer Choice Campaign, including an earlier white paper, is on the NetAction web site.

About The Micro$oft Monitor

The Micro$oft Monitor is a free electronic newsletter, published as part of the Consumer Choice Campaign http://www.netaction.org/msoft/ccc.html. NetAction is a national, non-profit organization dedicated to educating the public, policy makers, and the media about technology-based social and political issues, and to teaching activists how to use the Internet for organizing, outreach, and advocacy.

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NetAction is supported by individual contributions, membership dues and grants. For more information about contributing to NetAction, contact Audrie Krause by phone at (415) 775-8674, by E-mail at , visit the NetAction Web site at: http://www.netaction.org, or write to:

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Copyright 1998 by The Tides Center/NetAction. All rights reserved. Material may be reposted or reproduced for non-commercial use provided NetAction is cited as the source. NetAction is a project of The Tides Center, a 501(c)(3) non-profit organization.