Microsoft Tells Appeals Court That Breakup Not Justified

Microsoft handed in the final filing in its antitrust case appeal--a 75-page document that replies to the government's earlier filing, which reiterated that the company violated US antitrust laws and needs to be broken up. Oral arguments in the appeal could begin as early as February 26.
  
In addition to Microsoft's standard arguments--that the company didn't violate the law by illegally bundling products--Microsoft says that it has other reasons to believe it will prevail against the Department of Justice (DOJ). The company notes that since last year Judge Thomas Penfield Jackson, who oversaw the case, has repeatedly bad-mouthed the company in interviews, an indication that the judge wasn't impartial. And Microsoft says that the DOJ's filing hints at subtle concessions that suggest that the government's case isn't as sound as it appears.
  
"\[The government\] acknowledges that much of the conduct \[it challenges\] was lawful and procompetitive," Microsoft states in its filing. "On the central issue in the case, plaintiffs concede that Microsoft did not violate the antitrust laws by 'offering Internet Explorer (IE) to OEMs in a bundle with Windows at no extra charge.' Indeed, they admit that the district court found Microsoft's conduct 'in developing a Web browser and offering it to OEMs and users with Windows to be lawful.' \[The government also\] concedes that 'developing and improving \[IE\], making it widely available, and encouraging its use based on the merits of the product constituted competition on the merits.' And, with regard to Java, \[the government\] acknowledges that Microsoft 'develop\[ed\] an attractive alternative Java implementation' for Windows. Whatever remains of \[the government's\] case after these concessions does not amount to a Sherman Act violation and is certainly not sufficient to justify breaking up Microsoft and imposing other extreme relief."
  
The company also was clear in its appraisal of Judge Jackson. "The district judge's repeated public comments \[about the company to the press\] also demonstrate an animus toward Microsoft so strong that it inevitably infected his rulings," the filing states. "For example, \['World War 3.0' author Ken\] Auletta reports that the district judge compared Microsoft executives to unremorseful gang members convicted of brutal, execution-style murders and criticized Microsoft's CEO for having 'a Napoleonic concept of himself and his company.' Indeed, in the public eye, the district judge has joined the fray as an adversary of Microsoft." The company is asking the Appellate Court to consider throwing out Jackson's verdict so that the case can be retried with a different judge.
  
Microsoft's arguments might not have changed much, but as the case churns ever onward, some signs indicate that the appeals court might overturn Jackson's decision. Public interest in the case is at an all-time low, and with more than a year separating today's appeals battle from the courtroom histrionics that made headline news, the outrage over Microsoft's past behavior won't likely have a lasting effect. Few important figures in the computer industry have bothered to stand up publicly and decry the company's abuse of power, even as that power perceptibly slips with each passing day. Companies that in the past might have quietly stepped around markets that were deemed Microsoft's dominion are now brazenly competing with the software giant, a sign that the trial might already have had its desired effect. And although the government is unlikely to reverse the sliding fortunes of companies such as Netscape, other Microsoft competitors continue to perform well.
  
And the Microsoft of today is a changed company, less threatening and more open to working with competitors and the press alike. But the possibility of settlement still hangs over these proceedings. The climate might be right for Microsoft to make a few key concessions and maintain its right to innovate and release new products as the company sees fit. As many employees and shareholders have requested, now might be the time for Microsoft to put this case behind it.

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