Microsoft says "enough", appeals ruling

You know it's a big story when all of the major news organizations--CNN, MSNBC/NBC, ABC, and CBS--are covering it at the top of the hour. Today, Microsoft brought its case before a group of federal judges, hoping to overturn a temporary injunction that was brought against the company in December. The case is all about "integration": specifically, whether the Internet Explorer Web browser is an integrated--and integral--part of Windows. Microsoft is arguing that it is, and that it should be allowed to innovate with its products as it sees fit. The U.S. Department of Justice, on the other hand, says that Internet Explorer is a separate product from Windows and that Microsoft is once again using its monopoly position in operating systems to shove another product down consumer's collective throats.

"This is about the freedom of high-technology companies to continue to innovate," said Microsoft attorney William Neukom.

If only it were that simple.

One issue with U.S. anti-trust laws is that the government must prove that Microsoft is somehow harming consumers. And Microsoft, clearly, is not doing that when they are offering more of what people want for free. When Federal Judge Thomas Jackson ordered Microsoft to offer two versions of Windows--one with IE and one without--hardware manufacturers just kept ordering the one that came with IE simply because no one was asking for the other--seemingly less powerful--version.

On the other hand, Microsoft is barred from product "tying" due to their 1995 consent decree. This prevents Microsoft from forcing software bundles such as Encarta, Publisher, or other products on hardware manufacturers as they have in the past. Microsoft has often used this tactic to gain marketshare for a product before removing it from a bundle and selling it.

So, on Tuesday, Microsoft appeared before an appellate panel and made their case. Aside from wanting to have the temporary injunction dismissed, Microsoft is attempting to have Special Master Lawrence Lessig--assigned by Judge Jackson to assist him with technical matters--removed from the case. Microsoft argues that Lessig to too closely allied with browser competitor Netscape to be objective.

Today's hearing lasted about 90 minutes and both sides of the case--both Microsoft and the DOJ--were subjected to tough questions from the panel of judges. Microsoft lawyer Richard Urowsky said that Judge Jackson's temporary injunction against the company was "improper" because Microsoft was not found in contempt of the 1995 consent decree. Urowsky says that Jackson overstepped his bounds in issuing the injunction. When a judge on the panel noted that Microsoft should have known it was on notice, Urowsky pointed out that not a single hardware manufacturer has asked for a version of Windows without IE.

Microsoft's representatives were repeatedly asked to define "integration" and to provide examples of integrated products the company has created in the past. Urowsky chose Windows NT, Word, and Office as examples.

When it came time for the DOJ to be questioned, they did not escape the wrath of the panel either. DOJ attorney Douglas Melamed was also hammered repeatedly about integration: the panel asked how IE and Windows couldn't be integrated when they share so much common code. Melamed cited Microsoft Word as also sharing a common code base, though he said Microsoft never called that product "integrated". Melamed was also asked why Microsoft should be subjected to a preliminary injunction that the DOJ never even asked for.

A decision is expected within two to four weeks. Both sides agreed that the judges were well versed in the technical matters surrounding the case, though no one would venture what they saw as the potential outcome. Next on the chopping block is Windows 98, which the DOJ might also try to stymie. A decision is expected on that before the middle of May

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