Reporter's notebook: Aspen Summit redux

ASPEN, COLO. -- When he was a student at Harvard University majoring in economics, Sun Microsystems Inc. Chairman and CEO Scott McNealy studied the issue of antitrust. It's still a big topic with him, particularly when it comes to Microsoft Corp.

McNealy, a Microsoft critic, doesn't hold back when talking about the software giant, and he raised plenty of warnings about the company at the Aspen Summit, an annual gathering of high-tech policymakers and industry leaders sponsored by the Progress and Freedom Foundation. At the summit, which ended yesterday, McNealy also answered questions from a reporter on the issue:

Should the government stop the release of the Windows XP operating system?

"There ought to be an injunction against Microsoft," he quipped, then added, "I have a lot of faith in the Department of Justice because they have a 100-year history, tradition and legacy of doing the right things to protect consumer choice in the markets."

The antitrust case is due to be transferred Friday from the District of Columbia U.S. Court of Appeals to the lower court, which is expected to begin work on setting a remedy in the case. Once this case is transferred, the government has the option of seeking preliminary injunctions against Microsoft, such as blocking the release of Windows XP, before a final remedy is decided.

Is a breakup of Microsoft needed?

"I don't think you can take any one particular tactic unless you look at a holistic, systematic set of remedies," said McNealy. The government could seek a structural remedy or breakup, but it could also continue to scrutinize the company in the same way it pressured IBM over its 13-year case against the company, he said.

IBM ultimately "unbundled" its pricing for hardware and software, which helped create a new wave of technology firms. The government dropped its case against IBM, a move some saw as an admission of failure, but McNealy said he believes the Justice Department should "get an A plus-plus for how they handled IBM."

McNealy, in a speech at the summit, told the high-tech crowd that "you are in danger of losing choice in the computer business."

"The current trajectory is it's us or them," he said, referring to Microsoft. "That's not a lot of choice."

"I'd love to retire and spend time with my boys, but I don't want to leave them an environment that has only one choice; I'd feel too guilty," said McNealy.

A vote for self-regulation on privacy

Another topic at the summit: Trouble for the European Union's effort to establish tough privacy standards that limit the use of data. Many European countries that are party to the agreement haven't yet passed privacy laws that conform to it.

"It's almost impossible to enforce," said Ira Magaziner, who headed the Clinton administration's e-commerce policy, of the European privacy rules. "So I think the self-regulatory approach to privacy is still the best one, and the one that actually has the best chance to protect privacy," Magaziner said in an interview. Magaziner was responsible for drafting a framework in 1997 that stressed the need for industry leadership and self-regulation on issues such as privacy.

More worrisome, said Magaziner, is the action of courts on Internet issues, such as last year's decision by a French court ordering Yahoo Inc. to prevent Internet users in that country from gaining access to Nazi memorabilia being sold on its auction Web site (see story).

Ultimately, Magaziner said he believes technology can be used to address content issues. But until that point is reached, "I think it's a big mistake for governments to bring actions like the one they brought in France," he said. "It will hurt the growth of the Internet in their country."

Magaziner held a position in the Clinton administration that was responsible for pulling together domestic and international e-commerce issues. Such a post hasn't been duplicated in the Bush administration, said Jeff Eisenach, president of the Progress and Freedom Foundation. "The thing that concerns me is the lack of that kind of leadership, at least at this stage of the process," he said of the Bush administration.

Be careful not to let Congress 'do things'

Participants at the Aspen event also heard U.S. Federal Trade Commissioner Orson Swindle urge restraint on privacy rules.

"Let's don't rush in and start passing rules and regulations for something that is evolving," Swindle said. "There is too much emotion ... and emotion has terrible effects on people in Congress; they go out and do things."

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