Although the year is only half over, it seems increasingly likely that the biggest business story of the year will be the court decision to split Microsoft into two separate companies in order to promote competition. If it stands up on appeal, Judge Thomas Penfield Jackson's decision will take its place with past landmark antitrust decisions to break-up Standard Oil and AT&T. The Microsoft decision demonstrates that antitrust policy remains relevant even in the "new economy" and will likely influence the behavior of the new high-tech companies for years to come. In the long term, however, some of the most significant implications of the Microsoft case are likely to be outside U.S. borders.

Antitrust policy has more than a century of honorable history in the United States. Although some revisions have been experimented with to allow companies in some industries -- notably semiconductors -- to collaborate on research and development, there remains a consensus that trusts and cartels have numerous negative impacts. Monopolies and trusts harm consumer interests both by raising long-term costs and -- perhaps more importantly -- by stifling competition and innovation, which denies consumers new and better products.

An open-and-closed trial

Microsoft and its defenders originally argued that these concepts were dated in the "new economy" in which no company could ever gain a monopoly or stifle competition. Initially, many were inclined to accept much of the Microsoft position. During the trial, however, the Department of Justice established a compelling case that the company had engaged in anti-competitive practices in violation of U.S. antitrust laws. In fact, it was surprising to see how many of the old anti-competitive practices attributed to monopolists of the past had been revived and applied with relish by Microsoft in the "new economy." Many of Microsoft's arguments began to seem rhetorical and without real substance.

By the end of the trial, there was a notable shift of elite opinion in the Microsoft case in favor of the DOJ; Jackson's ruling against Microsoft was widely expected. Just a few months ago, talk of breaking up Microsoft was confined almost to the lunatic fringe; by the time of the judge's breakup ruling, it was conventional wisdom.

The remedy decision is an important juncture in the Microsoft case, but the dispute is likely to rage on for sometime. The company has a campaign underway apparently aimed at influencing public opinion on the case. The inevitable appeals of the court decision could take years. Microsoft also seems to hope that the upcoming elections may result in a political atmosphere more favorable to its position.

What will it mean abroad?

Strikingly, however, the international implications of this litigation have received little attention. The chant that the economy is now globalized is repeated with mind-numbing consistency in every imaginable context, except this one. When antitrust laws took root in the late 19th and early 20th century, the United States could afford to largely ignore the economies of the rest of the world. Two oceans insulated the United States from much foreign competition and the U.S. economy was largely a playing field unto itself, reserved for U.S. business. This is the context in which antitrust laws were written.

Since that time, the concept of antitrust has also gone global. Antitrust laws form part of the competitive environment in a number of countries; the European Union has forged an aggressive antitrust policy -- known there as competition policy. Since most of the world's largest companies -- Intel, General Electric, Boeing, Cisco and, of course, Microsoft -- call the United States home, this international trend should be of more than passing interest seeing as these companies could well become targets of foreign antitrust actions.

Of course, foreign countries have a perfect right to develop an antitrust policy of their own, but these policies are very likely to have different standards of evidence, remedies and judicial protections than U.S. law. Inevitably, countries will face the temptation to use their antitrust laws not only to police competition, but also to protect domestic companies and hobble foreign competitors.

This concern is more than theoretical. The European Union's scrutiny of the Boeing-McDonnell Douglas merger seemed driven as much by concern for protecting Airbus -- Europe's largest aircraft manufacturer -- as by legitimate competition policy objectives. Europe has also been aggressive in reviewing various other mergers and partnerships involving U.S. companies, including the AOL-Time Warner and the MCI WorldCom-Sprint merger. Given the ambiguities inherent in an area as complex as antitrust, there will be infinite opportunities to use proceedings to curb U.S. companies and compromise U.S. interests.

Further, a new wave of antitrust practitioners inevitably will spring up around the globe. How will the United States react when Japan, or Brazil or India launches its own actions against Microsoft with resulting remedies aimed at bolstering their domestic software companies? Similar actions by other countries may ultimately prove the most difficult ramification of the Microsoft case. Currently, distinguishing legitimate actions from veiled protectionism may prove next to impossible.

Toward an international agreement?

What is the solution? Obviously, it lies in some sort of international standards for antitrust actions. This simple idea faces a number of barriers, however. There is simply no international consensus on antitrust/competition policy; many countries, in fact, have no antitrust laws. Those that doshow marked differences. Even the United States and Europe, which agree on many principles, differ in their antitrust/competition policies.

Beyond that, there is real, reasoned opposition to negotiating an international antitrust agreement in the United States. Some fear that other countries will use global antitrust negotiations as an excuse to undermine legitimate U.S. trade remedy laws. Many in the U.S. antitrust community, including some at the Department of Justice, have expressed concern that such negotiations might be used to water U.S. antitrust law down to a much lower global standard. They fear that the United States' century-old legislation and precedents on antitrust might be swept away in an international negotiations in which most of the participants have little or no interest in legitimate antitrust/competition policy objectives.

These are real concerns, and they should be central in a U.S. effort to forge policy on global antitrust negotiations. Here more than in past negotiations, the United States must stand firm so that its core principles and interests are not compromised by a negotiated agreement. As in most cases, a bad agreement is much worse than no agreement at all.

That said, however, pressure is likely to build for some type of international agreement on antitrust. Without such an agreement, U.S. companies are likely to shortly become targets of foreign efforts -- some legitimately intended and some pure chicanery -- to break up or hobble their foreign operations.

For the foreseeable future, the discussion of antitrust in the United States is likely to be dominated by the Microsoft case and -- depending on the attitude of the new administration in the White House -- the potential to extend action to other "new economy" companies. As interesting as these questions are, the reality of globalization is ignored at great peril. As the home of most of the world's largest companies, the United States should give serious consideration to the problem of how best to address the international ripples set off by the Microsoft splash.