WASHINGTON -- The multifaceted career of Joel I. Klein has become indelibly stamped with one public image: the smart kid from a public-housing project who is now a hard-driving government lawyer on a mission to humble America's richest man.

But Klein, the federal government's chief enforcer of antitrust laws, is more complex than that, and his headline-making legal joust with Microsoft's billionaire chairman, Bill Gates, will not alone determine whether Klein leaves a mark on history.

Klein took over the Justice Department's antitrust division two years ago, at a momentous time: big corporations merging at a dizzying pace, high-tech companies brashly daring the old rules of competition, commerce going global and threatening America's customary dominance.

The brave new world of business poses almost daily challenges for the old laws of antitrust, dating back to 1890 and the Gilded Age, with its giant corporate trusts.

The key challenge: keeping competition robust while encouraging innovation and avoiding handicapping U.S. companies as they challenge big foreign companies for global business.

Klein's admirers say the 52-year-old assistant attorney general is energized by the challenges and is equal to them. "In terms of total activity -- especially activity that has high stakes attached to the outcomes -- Joel's antitrust division is every bit as active as any going back to the 1960s," says William E. Kovacic, a visiting professor of antitrust law at George Washington University Law School.

Klein comes to the challenges, Kovacic adds, with "a very well-informed understanding of the modern history of competition policy, a coherent vision of how to deal with the challenges." Depending on the outcomes of the antitrust division's activities, "his could prove to be the most influential stewardship of any we've seen since World War II."

Part of Klein's authority as an energetic regulator is a longtime friendship with President Clinton. He was brought into the White House to help Clinton get through the legal crisis that followed the suicide of deputy White House counsel Vincent W. Foster Jr.

Klein, in fact, took on Foster's job, and held it until moving to the Justice Department to work on antitrust policy. He emerged from the beleaguered White House with no apparent harm to his personal and professional reputation.

Even so, Klein has strong detractors resulting from his regulatory work. His aggressive challenge to the big-company merger trend, for example, is lambasted by William F. Shughart II, economics professor at the University of Mississippi. Looking at recent merger lawsuits by the Justice Department, Shughart says Klein has "politicized" antitrust.

Under Klein's management, says the Mississippi professor, antitrust laws "have far too often been brought to bear in %J attacking innovative, risk-taking firms that have succeeded in developing previously unknown products and in establishing wholly new industries."

Nothing else that Klein has done has made his tenure as visible as has the anti-monopoly lawsuit against Gates and Microsoft, generating almost daily front-page news as it continues in the U.S. Courthouse in downtown Washington.

Writing this year in a legal newspaper, the National Law Journal, Jeffrey M. Shohet, a San Diego antitrust lawyer, said: "Not since the antitrust laws were first applied to the 19th-century steel and oil trusts has a more interesting and important antitrust problem been presented." He suggested that the case might lead to the breakup of Microsoft.

The Justice Department lawsuit, filed in May and joined by 20 states and the District of Columbia, contends that Microsoft has misused the power it has gained in the computer market through its breakthrough Windows operating system, which runs 90 percent of the nation's personal computers.

With that dominance, according to the lawsuit, Microsoft has sought to force others to use the company's Internet Explorer browser to gain access to the Internet, thus eliminating competing browsers, such as those of rival Netscape Communications.

A native of the Bronx and the son of a mail carrier, Klein and his family lived in Army barracks that were converted into city housing projects.

But Klein's supporters insist that it is not proletarian envy that drove him to bring his lawsuit against the wealthy Gates and his powerful software company. Rather, they say, it was Klein's firm conviction that, for all his computer genius, Microsoft's dynamic leader had become an old-fashioned corporate bully.

Gates, who considers the antitrust charges against Microsoft to be "outrageous," sees the fight as do-or-die for the software industry. Klein, he complains, has set out to kill innovation and imagination, seeking to punish Microsoft just because it is better at what it does than anybody else.

He has called the lawsuit "a step backward for America, for consumers and for the PC industry, which is leading our nation's economy into the 21st century."

Klein, who was not available to be interviewed for this article, has defended the lawsuit as pro-consumer, saying it "will protect innovation by ensuring that anyone who develops a software program will have a fair opportunity to compete in the marketplace."

Kovacic, the George Washington professor, says the Microsoft lawsuit, and some other court challenges brought by Klein and his staff, "promise an enormous impact on antitrust policy." Out of the Microsoft case, in particular, he adds, "will come a formative restatement of competition law governing" the behavior of companies that dominate their markets.

Another recent Klein lawsuit, challenging Visa and MasterCard efforts to keep their member banks from issuing competing credit cards, "has the possibility of generating an enormously influential treatment of the law regarding joint ventures and agreements among competitors," Kovacic believes.

Such lawsuits, he says, demonstrate an approach "that is distinctively Klein's" -- a willingness to go to court to clarify antitrust doctrine, based upon the antitrust chief's view "that if you really want to change the law, you have to do it in front of a judge."

Klein's predecessors at the Justice Department and the Federal Trade Commission relied more on consent agreements, public speeches and guideline statements to declare antitrust policy than on suing to apply or alter the law, Kovacic says.

Overall, Klein has argued that antitrust enforcement is now "more crucial than ever in benefiting consumers and businesses and protecting them from illegal anti-competitive actions."

The new challenges, he has said, come from increased globalization of commerce, rapid technological change at home, deregulation of key industries -- such as telecommunications and electric power -- and a continuing and still-building "merger wave" no longer driven by financial reasons, but by business strategy in trying to gain a competitive edge.

Klein also has boldly reached across U.S. borders, encouraging business regulators in other countries to crack down harder. Klein critics say, for example, that it was his intervention or that of his aides that has turned regulators in Japan, Brazil and Israel against Microsoft.

Pub Date: 11/19/98