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Software outlaw roams the streets!
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April 3, 2000 | Or at least it has broken the law --
doing "violence" to the competitive
process -- according to the U.S.
District Court where its antitrust case
has been heard over the past year and a
half. That judgment will stand
while the court decides what should be
done with, or to, Microsoft -- and
while Microsoft inevitably takes its
case up the judicial ladder, in hopes
of reversing the ruling. Those are the two directions this battle
will take now that settlement
talks have failed (and, gee, who was
really surprised at that?) and
judgment has been entered. On one hand,
the plaintiffs in the trial
will, along with Microsoft's enemies,
try to agree on a set of "remedies"
that might or might not include breaking
Microsoft up into little pieces.
On the other hand, Microsoft's legal
army will abandon its field of shame
in Judge Thomas Penfield Jackson's
courtroom for what it fervently hopes --
and has good reason
to believe -- will be more hospitable
terrain in the U.S. Court of Appeals. Also Today Break up? Make up? or appeal?
Microsoft watchers, company leaders and critics weigh the software giant's future in the wake of the antitrust ruling.
Judge to Microsoft: Guilty!
Thomas Penfield Jackson slams Microsoft for abuses of monopoly power.
Scott Rosenberg Unlike the judge's "findings of fact" released last November, which painted a gripping narrative of Microsoft's predatory behavior in the browser wars, the "findings of law" released today is a relatively dry affair. The document details the specific legal grounds under which Microsoft has violated the Sherman Antitrust Act. Jackson concludes that "Microsoft maintained its monopoly power by anti-competitive means and attempted to monopolize the Web browser market, both in violation of Section 2 [of the Sherman Act]. Microsoft also violated Section 1 of the Sherman Act by unlawfully tying its Web browser to its operating system." The judge rejected another claim that Microsoft's contracts with other companies constituted "unlawful exclusive dealing" under the antitrust act's Section 1. Overall, he found that Microsoft -- rather than "innovating," as it has steadfastly maintained -- actively worked to reduce the choices available to consumers: "Microsoft's anti-competitive actions trammeled the competitive process through which the computer software industry generally stimulates innovation and conduces to the optimum benefit of consumers." None of this comes as any surprise; it was plain that Jackson would come down on Microsoft from the tenor of his "findings of fact." But one part of the new ruling does provide some dramatic sparks. If you remember, before Jackson began presiding over this trial he also ruled on a narrower case, one that had charged Microsoft with violating the terms of a 1995 consent decree. That agreement had averted a major antitrust case in its time. But in 1997 the Department of Justice argued that Microsoft's behavior in the browser market violated its terms. Jackson agreed -- but his colleagues on the U.S. Court of Appeals did not, and overturned his ruling in 1998. That preliminary appellate decision has hung forebodingly over every step of the subsequent full-bore antitrust trial. Now, in today's findings, Jackson fires a preemptive round at his appellate colleagues, citing a couple of Supreme Court decisions as precedents for his decision on the "tying" issue -- thereby, as it were, attempting to trump the appellate court by going over its head. This gets a little complicated -- well, of course! -- but basically, the appeals court had granted software companies like Microsoft immense latitude in product design and set very high barriers to antitrust complaints based on the integration of products ("tying"). Jackson fires back: "The majority opinion in Microsoft II [the appeal in the consent decree case] evinces both an extraordinary degree of respect for changes (including 'integration') instigated by designers of technological products, such as software, in the name of product 'improvement,' and a corresponding lack of confidence in the ability of the courts to distinguish between improvements in fact and improvements in name only, made for anti-competitive purposes. Read literally, the D.C. Circuit's opinion appears to immunize any product design (or, at least, software product design) from antitrust scrutiny, irrespective of its effect upon competition, if the software developer can postulate any 'plausible claim' of advantage to its arrangement of code." Citing two Supreme Court rulings, Jackson maintains that the boundaries of specific software markets -- like browsers and operating systems -- should be defined not by what the software-maker defendant says, but by how the software-buying public acts and thinks. While Jackson nods in the direction of the appellate decision's "admonition" regarding "the perils associated with a rigid application of the traditional 'separate products' test to computer software design," he concludes with his own appeal to the highest court in the land: "To the extent that the Supreme Court has spoken authoritatively on these issues, however, this Court is bound to follow its guidance and is not at liberty to extrapolate a new rule governing the tying of software products. Nevertheless, the Court is confident that its conclusion, limited by the unique circumstances of this case, is consistent with the Supreme Court's teaching to date." In other words, Jackson to appellate judges: My precedents are stronger than yours! This legal conversation is critical because, ultimately, the remedies Jackson's court proposes are meaningless until and unless his judgments are upheld in higher courts. But legal conversations take time. Even on the fast (for antitrust cases) track that this case has taken, it's likely to be two more years before we know the outcome.
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