Software Giant Formally Battles Antitrust Finding
Microsoft Corp. on Tuesday filed papers formally disputing the scathing antitrust findings issued by a federal judge in November, saying it has not used monopoly power to crush rival personal computer software makers as the judge contended.
In a 70-page brief, the Redmond, Wash.-based software giant rejected U.S. District Judge Thomas Penfield Jackson’s findings that it had aggressively used its monopoly power to stifle innovation by rivals.
In filings that focused more on business conduct in the software industry than its dominant market share, Microsoft contended that Jackson overlooked evidence that the overall computer business is highly competitive. Microsoft cited the proposed merger of America Online Inc. and Time Warner Inc. to bolster that notion.
The “claim that there is a dangerous probability that Microsoft will achieve monopoly power in the alleged market . . . is even less likely now given AOL’s recently announced agreement to acquire Time Warner,” Microsoft said in its brief.
Microsoft said Jackson too narrowly defined the company’s disputed business market as just personal computer operating system software. Although Microsoft’s flagship Windows product runs more than 90% of all personal computers, the company argued in its brief that “having an extremely popular product does not make a company a monopolist.”
Government lawyers have argued that Microsoft violated the federal Sherman Antitrust Act and broke state antitrust statutes by using its dominant Windows software to extend its power over other computer software.
A Justice Department official, responding to Microsoft’s filing, said the company’s mention of the proposed AOL-Time Warner merger was gratuitous because the deal arose well after the trial record was closed. The official added that the proposed deal actually undermines Microsoft’s arguments because the union of the online giant and entertainment Goliath is evidence that “AOL is not in the software business, it is in the content distribution business.”
Microsoft filed its brief late Tuesday in U.S. District Court in Washington in response to legal arguments submitted early last month by the U.S. Justice Department, 19 states and the District of Columbia.
The brief came as the company reported soaring corporate profit and as Microsoft lawyers and those for the government were expected to continue settlement talks before a federal mediator in Chicago.
The legal filings by both sides, which will be supplemented by reply briefs over the next few weeks, will be reviewed by Jackson before the judge reaches his final verdict in the case.
Despite recent reports that the government is considering pressing Jackson to break up Microsoft into as many as four companies, Microsoft did not raise that issue in Tuesday’s brief.
Company officials said any talk of a breakup would be more properly addressed after Jackson has reached a final ruling in the case. And a Microsoft spokesman said the evidence is not strong enough to support a ruling against the company.
“Even if we accept the unflattering picture painted by Judge Jackson’s findings of fact, the findings do not add up to an antitrust violation,” Microsoft spokesman Jim Cullinan said.
