Despite the Spin, Ruling No Victory for Microsoft
Microsoft was hoping for a decision from the appeals court that called the government’s entire antitrust action into question, restored the company’s dignity and set the stage for a settlement that wouldn’t have much effect on the software giant’s day-to-day activities. Instead, Thursday’s unanimous decision solidly defines Microsoft as little more than a gang of thugs whose contempt for the law is exceeded only by its hubris.
“The court has decisively repudiated Microsoft’s contention that its behavior was legal,” said Jeff Blattner, the former deputy assistant attorney general for the Justice Department’s antitrust division and one of the government’s key strategists in the case.
That’s got to be hard to swallow for thousands of Microsoft employees, who muddled through the last couple of years believing that they were right and the rest of the world was hopelessly stupid. In fact, the rest of the world appears to understand pretty well what Microsoft has been up to.
The court’s decision leaves the company exposed to hundreds of civil lawsuits, which can rely on Microsoft’s actions as legal facts in other courts--costing the company a great deal of money. The lack of resolution in the case means Microsoft can’t get go back to business as usual.
Microsoft’s spinmeisters were up early Thursday proclaiming that the appeals court reversed Judge Thomas Penfield Jackson’s order to break up the company, but in reality the court simply ordered a new judge to come up with a remedy. The appeals court upheld all of Jackson’s factual findings and the most serious violations of antitrust law.
“The foundation of the breakup order--the reasons Jackson found a breakup was necessary . . . remains intact,” said Donald M. Falk, an antitrust specialist with the Chicago-based law firm of Mayer, Brown & Platt. “The court said the core of the government’s theory was absolutely correct, that 99% of Microsoft’s conduct was illegal. Far from saying the case was crazy, you had a unanimous court, including some pretty conservative judges, signing off on the government’s case.”
That certainly wasn’t what Microsoft was expecting. The company has never conceded anything since the government hauled it back into court in 1997 for ignoring a 1995 consent agreement. Throughout the investigation and trial that followed, Microsoft’s executives--including imperious leader Bill Gates--behaved like a bunch of frat boys awaiting punishment after being caught papering the dean’s house--rolling their eyes, nudging each other and cracking wise, confident that their vast wealth and power would shield them from any repercussions.
For instance, Jackson ordered the company to release a version of the Windows operating system in which the Internet Explorer Web browser could be removed. Microsoft responded by offering computer manufacturers the option of selling machines that would not start up. Grinning Microsoft executives insisted that they were only following the judge’s orders.
A parade of Microsoft executives cheerfully insisted that the company had never used its monopoly power in the market for desktop computer operating systems to force companies such as Apple Computer Inc., America Online Inc. and Intel Corp. to do Microsoft’s bidding. But documents showed that not only had the antitrust violations taken place, they were deliberately planned at the highest levels of the organization, as when Microsoft executives told the people at Netscape Communications Corp. to play ball Microsoft’s way or die.
“Microsoft executives routinely perjured themselves in front of Jackson and engaged in massive cover-up,” said Ed Black, president and chief executive of the Computer and Communications Industry Assn.
The appeals court insisted that another judge craft a remedy only because Jackson’s comments to reporters during the trial could lead some people, as Microsoft has argued, to conclude that Jackson was biased against the company. Having another judge decide whether a breakup is an appropriate remedy neatly sidesteps that problem without requiring a new trial.
“The new judge no longer has to consider the question of whether this is a guilty company. That’s proved,” said Black. “The only question the new judge has to answer is how do we prevent this company from continuing to violate antitrust law.”
How the court deals with Microsoft--or whether the two sides can reach a settlement--remains up in the air. The most immediate effect of Thursday’s ruling is to effectively kick the chair out from under a lot of the fallacious thinking on Microsoft’s campus. Until now, the company’s employees have been able to rationalize the case as the ravings of ignorant government bureaucrats and a single inept jurist. But the truth now is inescapable. Every single judge who has looked at these issues has come to the same conclusion: These guys act like crooks.
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Dave Wilson is The Times’ personal technology columnist.
