InformationWeek

September 14, 1998

The Lawyers Of Summer

awyers for Microsoft and the government are gearing up for the Sept. 23 start of the antitrust trial, brought by the U.S. Department of Justice and 20 states' attorneys general.

That is, unless the judge grants Microsoft's request in a Sept. 17 hearing to delay the trial for another six months in order to give the company time to prepare its defense against a raft of new allegations, brought by the government in late August and early September.

Over the course of the summer, the government's case has taken some interesting turns.

Perhaps most significant for Microsoft was a three-judge federal appeals court panel's opinion in late June that the courts should not be designing software. Since then, the appeals court's apparent statement of direction has become Microsoft's mantra and the centerpiece of its defense.

In fact, in that ruling--over issues left over from the government's original October 1997 antitrust lawsuit--two of the three judges went beyond merely overturning a series of Judge Thomas Penfield Jackson's rulings. Instead, the court's opinion sent what is generally interpreted as a warning to the government for the current case. Perhaps as important, the appeals court also found that the inclusion of a nonintegrated version of Internet Explorer with Windows 95 was not illegal tying, and did provide user benefit. A different panel of judges from the same court decided a month earlier that Windows 98 could not be included in the earlier lawsuit.

Combined with the warning regarding courts designing software, many legal scholars say that, even if Jackson finds Microsoft guilty of illegally tying the browser and the user interface in Windows 98, there is a good chance such a ruling would be overturned.

Indeed, Jackson has been batting .000 with the appeals court in the Microsoft matter. Every one of his rulings against Microsoft has been appealed and reversed.

In the past few weeks, the government has apparently been seeking to expand its case by including more allegations that Microsoft sought to impede the marketplace through pressure on Intel, Apple, Netscape, Intuit, and RealNetworks. Other areas of concern that have been dumped into what started out as a fairly straightforward "tying" case include Microsoft's additions to Sun's Java language and allegations of a fake "bug" in Windows 3.1 that was meant to scare users away from running Windows 3.1 on DR-DOS.

Now, I'm no Pollyanna about this. I've covered Microsoft long enough to know there may well be a grain or more of truth to some allegations. But several prominent legal scholars have said that if these allegations are true, then the government should formally petition the judge to expand the suit or file a separate lawsuit.

Instead, the government merely heaped them into the goulash of charges, saying they are all relevant. If you hate Microsoft, that probably sounds right.

But if you feel that way, you should probably be prepared for elation followed by severe disappointment. If Jackson allows the expansion of the case without a formal petition, several legal scholars say the case will likely be overturned on a legal technicality: that Microsoft was tried on allegations it was not properly charged with and was not able to adequately prepare its defense. (Don't forget that Jackson is allowing only a dozen witnesses on each side.)

For those who scoff at this suggestion, think back three years. In his hearings over the original Justice Department consent decree, Judge Stanley Sporkin let a famously outspoken, anti-Microsoft attorney present "evidence" against Microsoft from three unidentified competitors. This same appeals court not only tossed Sporkin off the case for prejudice against Microsoft, it rebuked Sporkin and the attorney for blatantly violating Microsoft's Fourth Amendment right to confront its accusers.

So for the appeals court, technicalities matter, and Microsoft's batting average with the appeals court has been much higher than Mark McGwire's or Sammy Sosa's this baseball season.

Of course, Jackson could reject the new allegations as an attempt to expand the case without leaping through the proper legal hurdles. But given his string of previous rulings, I'd expect Jackson to let the government include the new accusations without a formal petition; and given his record with the appeals court, that could jeopardize the entire outcome of this case.

Even if Jackson ultimately finds Microsoft has violated antitrust laws, the odds are high that most, if not all, of his ruling will be overturned on appeal.

Perhaps a more effective alternative to the current route would be for the government to file a bunch of small, highly focused suits targeting each allegation. Not only would the government stand a better chance of winning some of them, it would also be much more likely to have the desired effect on Microsoft, which is to regulate the company's behavior.

However, the little cases don't produce the headlines necessary to spark the public's interest. And those little cases do not provide the springboard to higher political office like campaign ads that proclaim: "I stopped Microsoft cold."

Given all the political and legal machinations, it's easy to forget the stakes are high not only for Microsoft and the lawyers involved, but for the broader business environment. This has become the definitive antitrust case for the new, Internet economy. Think about the consequences should the government lose this case.

But if the government wins in the lower court and is completely, or mostly, overturned on appeal, do you believe Justice Department lawyers will have the nerve to try again this close to a presidential election? The country's mood is already against regulating Microsoft. Many notable politicians on both sides of the aisle have already publicly sided with Microsoft--including House Speaker Newt Gingrich. Federal Reserve chairman Alan Greenspan said last spring in an address to Congress that it is a mistake to go after Microsoft. And numerous surveys of IT professionals and consumers show that the public sides with Microsoft by huge margins.

So if the government loses this one on a technicality or an appeals court reversal, Microsoft's position in the marketplace may be cast in stone. At this point, the die has been cast. Are you prepared to live with the outcome?

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