In a curious move, Microsoft Corporation has filed a last-minute brief with Judge Thomas Penfield Jackson, arguing that the government itself argued against a breakup of Microsoft five years ago. In the mid-1990's the U.S. Department of Justice picked up a stalled FTC investigation of the company, which began in early 1990 when the FTC discovered a collusion agreement between Microsoft and IBM. But though the dissolution of the IBM/Microsoft agreement seemingly ended the investigation, the FTC had discovered enough damaging evidence about the software giant's business practices that it continued the probe. After two failed attempts at charging the company, the DOJ forged ahead to see whether it could bring any of the violations to trial. The first investigation ended with a consent decree in July 1995, when Microsoft agreed to curb its business practices without admitting any guilt. Though Justice claimed victory, most analysts saw the agreement as a slap on the wrist that allowed Microsoft to continue operating as it saw fit.
Five years later, this behavior has landed the company a guilty verdict in its antitrust trial. But Microsoft is arguing that the DOJ cautioned against a Microsoft breakup in 1995, saying that it would introduce "a substantial risk of economic harm." So the company is asking the judge to throw out the breakup proposal because it contradicts the agency's earlier findings.
"The government’s current rhetoric stands in stark contrast to its position on breakup during the Tunney Act proceeding in 1994 and 1995, when it publicly stated that breaking up Microsoft would cause significant harm to consumers, the marketplace and the software industry," said Microsoft spokesperson Jim Cullinan.
The two cases, of course, are not dissimilar. But Microsoft's foes rightfully claim that the company has had five more years to abuse its monopoly since this recommendation was made. At the time, it wasn't clear that Microsoft would extend its monopoly so effectively, and all of the abuses cited during the trial occurred after the 1995 consent decree. So an argument made in mid-1995 might be correct for the time, but it doesn't apply today. "That Microsoft repeatedly violated the law after the previous proceeding demonstrates why structural relief is necessary now," says Kenneth J. Arrow, the lawyer who wrote the words from 1995 now quoted by Microsoft. Judge Jackson will hold the first remedy proposal hearing this week