Government’s Microsoft Case Challenged
Justice Department lawyers faced a barrage of hostile questions Monday as they asked a panel of appeals court judges to uphold a lower-court order splitting Microsoft Corp. in two for antitrust violations.
Members of a seven-judge panel of the U.S. Court of Appeals for the District of Columbia reserved some pointed queries for Microsoft’s lead attorney, Richard Urowsky. But they concentrated their heaviest fire on the government, an indication that the lower court’s landmark decision to break up Microsoft could be partially overturned.
Judge A. Raymond Randolph and several others challenged the government’s key claim: that Microsoft illegally tried to force consumers of its Windows computer operating system to buy Internet Explorer, its Web browser. Randolph said he saw no harm for consumers in having an operating system and a browser from the same source.
“It’s almost like you’re saying, ‘I’d like to buy a clock radio without a clock,’ ” Randolph told John G. Roberts Jr., a private antitrust lawyer hired by the 19 states that joined the Justice Department’s suit.
U.S. District Judge Thomas Penfield Jackson in June found Microsoft guilty of violating antitrust laws by using its ubiquitous Windows software to thwart competition in the market for personal computer operating system software.
The appeals court is regarded as more sympathetic to Microsoft than either Jackson or the U.S. Supreme Court, which could eventually make the final ruling.
During Monday’s nearly five hours of oral arguments, the appeals panel, which includes four Republican appointees, appeared to split roughly along party lines in its questioning.
William E. Kovacic, a George Washington University law professor, pointed out that Randolph joined Chief Judge Harry Edwards, Stephen Williams and Douglas Ginsburg in expressing deep skepticism of the government’s claim. All but Edwards were appointed by a Republican president.
“All of the government’s key points got hammered,” agreed Robert Lande, a law professor at the University of Baltimore. “Things do not look good for the government.”
The sharp questioning of the government’s case--which went beyond the court’s usual aggressive line of inquiry--caused many legal experts to suggest that the appeals court will overturn at least some of Jackson’s order.
On Wall Street, Microsoft shares jumped nearly $3 to close at $59.56 in a market rally aided by forecasts that the Federal Reserve will soon cut interest rates again.
The skepticism expressed by the court could complicate efforts to settle the case out of court. Microsoft probably would be heartened by either a complete victory or a mixed decision, reducing the government’s leverage to get the company to accept tough sanctions.
Some of the appeals judges who were generally critical of the Justice Department signaled agreement with the government’s case on some points. Edwards, for example, said Jackson’s finding that Microsoft barred Windows users from deleting the Internet Explorer browser icon from the computer desktop appeared to be sound.
“It certainly looked predatory,” Edwards said.
Judges David Sentelle, who was appointed by President Reagan, and David Tatel, the court’s newest judge, noted that the appeals court could overturn Jackson’s damning factual findings only if they were clearly erroneous. Tatel also expressed skepticism about Microsoft’s contention that it could use its copyrights to trump federal antitrust law and prohibit computer makers from removing the Internet Explorer browser from Windows.
“I don’t see how you can get a reversal on this part of your case,” Tatel said.
Such concessions helped buoy the spirits of government supporters, who said even a partial victory in the appeals court would be enough to strike fear into Microsoft.
Such an outcome, they said, would continue Microsoft’s exposure to private consumer antitrust suits for billions of dollars in damages. A partial win also probably would mean that the case would be sent back to District Court for further proceedings.
“If this thing goes back to District Court for something, that’s still a message to Microsoft by the [appeals] court” that they support the government’s case, said Ed Black, president of the Computer and Communications Industry Assn., a Washington trade group.
“Look at the pool of judges in District Court,” Black added. “Jackson was by far the most conservative. He was the best [Microsoft] could have gotten.”
But for the most part, the government faced tough going even on the strongest part of its case: the claim that Microsoft used illegal business methods to maintain the dominance of its flagship Windows operating system.
Edwards said he doubted that it was Microsoft’s aggressive efforts to compete against archrival browser developer Netscape Communications Corp. that led to Netscape’s demise and acquisition by America Online.
“Causation--that’s what’s bothering me about your case,” Edwards told government lawyer Jeffrey Minear.
Edwards then asked Minear whether it would be a violation of antitrust laws if Microsoft were to try to run a grocery chain, rather than archrival software developer Netscape, out of business. Minear said there would be no violation because Microsoft “doesn’t have a monopoly in the grocery market.”
Edwards replied that Netscape, like the grocery store, did not consider itself a direct challenger to Microsoft.
“I believe there is a mixture of evidence about Netscape’s plans,” Minear said.
“You’ve got to do better than that,” Edwards retorted.
