Supreme Court Gives Microsoft Beneficial Delay
Microsoft Corp. won an important victory Tuesday as the Supreme Court declined to immediately hear the landmark antitrust case, sending it instead to a appeals court and giving the company more time to reposition itself in a fast-changing technology industry.
The decision means that it will be at least six months--and possibly more than a year--before the case could again come before the high court. The ruling also could lead to a decision that tosses out the government’s case entirely.
“This decision is very good for Microsoft,” said Robert Lande, a University of Baltimore law professor who has generally supported the government’s contention that Microsoft has a monopoly in software and needs to be broken up. “The bottom line is it is very likely the Supreme Court won’t hear this case for another six months to a year.” The turn of events, Lande said, could trigger a more aggressive Microsoft and “embolden the hard-liners at Microsoft who [for years] have been arguing that ‘we will win this case in the end.’ ”
Investors cheered the tactical victory, bidding Microsoft shares up by $1.44, to a close of $62.69, in heavy Nasdaq trading.
To be sure, the company still faces a daunting task. U.S. District Judge Thomas Penfield Jackson ruled in April that the software giant violated federal antitrust laws by using its Windows operating system to muscle out its competitors. Even a conservative bench may find compelling a trial record that includes incriminating memos from Microsoft executives as well as testimony from an uncharacteristically hesitant and forgetful Bill Gates.
Still, Microsoft, whose flagship software Windows runs more than 90% of all personal computers, will have a fresh chance to challenge the trial judge’s controversial handling of the case as well as solidify its software empire--and to do so before more sympathetic jurists.
Judge Jackson delayed implementation of his sanctions against Microsoft--including an order to split the company in two and to impose restrictions on its business practices--until the case was resolved by a higher court. Now lawyers for the government and Microsoft will confront an overwhelmingly conservative seven-judge panel at the U.S. Court of Appeals for the District of Columbia, which is generally skeptical of a breakup of Microsoft as well as the government’s intervention in the fast-moving computer software market. In an earlier case, the panel overturned an order issued by Jackson that Microsoft offer a version of Windows without its Internet Explorer browser.
Consumers are unlikely to feel any immediate effect from the Supreme Court’s decision. But the high court’s move could further cloud matters in the fast-moving technology marketplace and in Washington, where a new political administration will take office well before the Microsoft antitrust case is finally resolved.
Microsoft spokesman Jim Cullinan said the company was “confident of our case whether it was heard by either court.” The Justice Department said it is “looking forward to presenting the case to the court of appeals as expeditiously as possible.” Speaking for the 19 states that joined the Justice Department in suing Microsoft, Iowa Atty. Gen. Tom Miller said Tuesday he was disappointed that the Supreme Court declined, for now, to hear arguments in the Microsoft case. He said the states would prepare for appellate court but continued “to believe that prompt and final resolution of this case is in the public interest and that the Supreme Court is the most appropriate forum for that resolution.”
The appeals court moved quickly Tuesday, ordering lawyers for Microsoft and the government to submit proposed schedules for the appeals process by Monday. The lineup of advocates for Microsoft and the government will have a new look.
The government will face off against Microsoft in appeals court without its star trial attorney, David Boies of New York. The government will also be missing Joel I. Klein, the Department of Justice antitrust enforcer who made the decision to take on Microsoft and its billionaire chairman, Gates. Klein announced last week that he was leaving his post.
Among the Supreme Court’s nine members, only Justice Stephen G. Breyer dissented from the high’s court’s decision not to expedite the case. In arguing for rapid review, Breyer said the case “significantly affects an important sector of the economy--a sector characterized by rapid technological change. Speed may help create a legal certainty.”
Some observers say the fast-moving world of technology is quickly rendering the Microsoft antitrust case irrelevant. The company, for example, has embarked on a new Internet strategy in which it hopes to expand its Windows software franchise from desktop computers to the growing array of wireless hand-held devices.
Nearly two years after America Online Inc. acquired Microsoft archrival Netscape Communications Corp., for instance, the online giant is expected to introduce a new version of the venerable Netscape browser to its 21 million subscribers.
That could turn the tables on the central browser issue that triggered the government’s antitrust case against Microsoft by making Netscape, once again, the dominant browser. The government has charged that Microsoft illegally leveraged its Windows operating system and used free giveaways of its Internet Explorer browser to leapfrog Netscape Navigator and become the leading browser with a more than 75% market share today.
Four months ago, Judge Jackson sided with the government and castigated Microsoft for its business conduct. He ruled that the company illegally used its monopoly power in personal computer operating systems to quash its rivals and ordered the company split in two to prevent future antitrust violations.
Some experts believe that the Supreme Court may never review the Microsoft case and simply let it end with the court of appeals, whose judges have more extensive experience with complex business litigation because they handle a large number of disputes arising from federal regulation of industry. Another reason the Supreme Court might decline further consideration: the case presents no novel legal issues that the justices might feel compelled to consider.
“The court of appeals knows the facts of this case and can get through it much quicker than the Supreme Court--I think that’s one of the reasons the Supreme Court decided not to take the case” right away, said C. Boyden Gray, a White House lawyer in the Bush administration who now represents software developers supporting Microsoft.
In the end, Boyden said, “the Supreme Court won’t take the case because it presents no novel issues of law. I really think this enhances the chances of Microsoft winning or at least avoiding a breakup.”
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Bloomberg News contributed to this report.
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NOT FINISHED YET
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