MICROSOFT UNDER PRESSURE AT TRIAL'S END -- BREAKUP ILLOGICAL?

Judge Thomas Penfield Jackson provided little comfort to Microsoft during its final arguments before issuing a verdict in the antitrust case in Washington, DC last week. Judge Jackson undercut a significant legal defense proffered by Microsoft in its final arguments.

Microsoft argued that its copyrights on certain of its products allowed it to bundle the products, the very action for which the original antitrust suit was brought. When its products are bundled, and in some instances given away, its critics claim that the antitrust laws are violated.

Judge Jackson seemed dismissive of the argument and likened Microsoft's defenses to those of the Standard Oil monopoly in the early years of this century. His reference to Standard Oil was interesting in that the decision in that case was to breakup the company, the ultimate death penalty sanction with which Microsoft is most concerned.

Although settlement discussions continue under the mediation of Judge Richard A. Posner, chief judge of the United States Court of Appeals for the Seventh Circuit, it appeared increasingly unlikely that any agreement would be reached prior to a verdict. However, legal analysts argue that strong references from the trial bench will often provide the motivation for settlement that might previously have been missing.

The exchanges were heated in this final hearing and Microsoft continued to maintain a hard line of conceding nothing. "A lot of nothing doesn't add up to something," according to Microsoft's lead lawyer, John Warden. This hard nosed attitude is at the root of the government's frustration and distrust, and to its demand for breakup as the appropriate sanction. Yet Microsoft believes that it is fighting for its life and conciliatory attitudes are not conducive to its survival.

Absent a mediated settlement it is anticipated that Judge Jackson will rule that Microsoft is in violation of the antitrust laws. There will then be subsequent proceedings in which the appropriate sanctions are addressed. In that event the views of "special Master" Harvard Professor Lawrence Lessig will be of special importance. Appointed by Judge Jackson in 1997 to advise on issues arising from a 1995 consent decree, Professor Lessig's views have been commented upon favorably by the court, and his views were sought by the court in an "amicus" (friend of the court) brief, which was the subject of much questioning in the recent proceedings. However, most importantly Lessig is on record as believing that any breakup of Microsoft is illogical and unnecessary to an appropriate level of sanctions or to protect the public's interest in the resolution of the case. This puts him at odds with the government's position and that of competitive companies. Lessig believes that a less draconian sanction such as requiring general disclosure of Microsoft's application programming interfaces (API) would lead to greater competition and protections for an open society.

It is anticipated that a verdict will be forthcoming within the next several weeks.

Absent a settlement, whatever the verdict or the sanctions, there will be an appeal. The government's attorneys seemed focused on attempting to embolden Judge Jackson to not be concerned with the potential of being overturned on appeal and suggested that it would be impossible for the Supreme Court to find that Microsoft's actions do not violate the antitrust laws.

The larger issues of shaping the rules for high technology competition were addressed by Microsoft's attorneys who attempted to focus Judge Jackson on the implications of his judgment on the technology and communications revolution underway in the world, a concern addressed by Professor Lessig and even acknowledged by Judge Jackson.

Judge Jackson did appear somewhat skeptical of the government's argument that Microsoft illegally tied its Internet browser to its Windows operating system, an action which the government argued was not product design but "bolting" together two products and therefore a contract restriction that precluded PC makers from taking one product without the other. The court responded that there need be only a single plausible benefit for such tying to survive judicial scrutiny, referring to an earlier Appeals Court decision to that effect.