The Truth, the Whole Truth, and Nothing but the Truth (2024)

This was not a unique assessment in the fall of 1997. Joel Klein had been around Washington a long time, and a fairly clear consensus had emerged as to what kind of an antitrust chief he was likely to be. Klein was brilliant, scholarly, and sophisticated; also careful, cautious, and pathologically pragmatic. Politically astute and avowedly pro-business, he was nobody's idea of a tough-talking trustbuster in the tradition of Teddy Roosevelt or William Howard Taft. He would only take cases he knew he could win. And so, therefore, he'd leave Microsoft alone.

In his early fifties, Klein is short and slight, with a perpetual tan and a shiny bald pate. He walks and talks softly, and seems on first inspection to carry no stick at all. The son of a postman, he grew up in Queens, hoping to be a professional athlete. Robbed of that dream by the cruelties of genetics, he focused on academics, graduating magna cum laude from both Columbia University, where he majored in economics, and Harvard Law School. After stints as a clerk to Justice Lewis Powell and an advocate for the mentally ill, he went on to be a founding partner in a boutique Washington law firm specializing in complex trial and appellate work. In the 1980s, he earned a reputation as one of the most accomplished Supreme Court advocates of his generation, arguing eleven cases before the Court and winning eight—a record he may yet have the chance to improve in the Microsoft case.

For Klein, who had wanted badly to be Solicitor General, the antitrust post was a consolation prize—and a prize, in the end, that was almost denied him. Having sailed through his confirmation hearings in the spring of 1997, he hit unexpectedly turbulent waters in the Senate when his name came up for final approval, in large part because of his approval of the controversial merger of the phone giants Bell Atlantic and Nynex. "We've got an antitrust fellow here who rolls over and plays dead," said Senator Ernest Hollings of South Carolina, one of several who put a formal hold on his nomination. With The New York Times calling Klein "a weak nominee" and editorializing that the administration should withdraw him, and with his opponents obstinate and apparently committed, he seemed for a moment to be in serious trouble.

What few people knew was that one of those opponents was Gary Reback, who lobbied Senator Conrad Burns of Montana to put a hold on Klein as well. On Capitol Hill, where the only thing that moves faster than a senator sprinting toward a TV camera is confirmation scuttlebutt, word spread quickly about Reback's maneuvers, and found its way, inevitably, to the ears of Joel Klein. "Of course I heard," Klein told me later. "It did make me smile when Microsoft said I was carrying Netscape's water."

Yet even if Reback's finaglings didn't hurt Netscape's cause, they certainly didn't help. "The situation wasn't good," says Christine Varney, who became Netscape's chief Washington counsel that fall and was an old friend of Klein's. "Netscape found itself in a position where its principal antitrust lawyer had fought tooth and nail to defeat Joel's nomination, and now, lo and behold, Joel was the antitrust AG. As I said: not good."

In the DOJ's antitrust division, Klein was surrounded by lawyers so sober they made him look impetuous. But there was one dissenter to the hypercautious consensus: Dan Rubinfeld, a joint professor of law and economics at UC Berkeley, who had just taken over, at Klein's invitation, as the division's chief economist. Another small bald man with a low-key demeanor and a high-pitched metabolism, Rubinfeld seemed at first glance no more likely than his boss be eager to take a whack at Bill Gates. As a private-sector consultant, Rubinfeld had a lengthy record of appearing as an expert witness in corporate lawsuits, almost always on the side of the defense. In fact, years before, Rubinfeld had served as Microsoft's main expert in its prolonged, and successful, copyright litigation with Apple. "I had no anti-Microsoft bias when I got here," he told me. "I knew those people well. I respected them. I had spent a lot of time up there." Rubinfeld paused. "Though I don't expect I'll get another invitation to Redmond anytime soon."

When Rubinfeld took a look at the white papers, what struck him wasn't so much the catalogue of abuses they accused Microsoft of perpetrating as the clarity of Reback and Creighton's analysis. Since the 1970s, antitrust economics had been dominated by the free-market orthodoxies brought into vogue by a group of University of Chicago scholars such as Milton Friedman and Ronald Coase, who argued that the market functioned so well that government intervention was unnecessary and even harmful. As an academic, Rubinfeld was part of a growing vanguard of "post-Chicago School" economists who rejected those orthodoxies; Garth Saloner, the Stanford professor who worked with Creighton and Reback, was another. Like Saloner, Rubinfeld had spent the past few years thinking about dynamic high tech industries and had embraced the new economic ideas, from network effects to technological "lock-in," being advanced to explain how such industries work—ideas at the heart of the Netscape briefs.