Microsoft, States Exchange Heated Final Arguments

Attorneys for Microsoft and the nonsettling states faced off in court this week (for the last time, let's hope) to present final arguments in the Microsoft remedy hearings. And never has the term "arguments" been more apt: The two sides broke into heated exchanges about the various antitrust remedies that are up for grabs in the case. At one point, Microsoft lead counsel John Warden even refused to answer a pointed question from Judge Colleen Kollar-Kotelly, inciting an impassioned plea from the states to punish Microsoft for its "thuggish" behavior. It was an ugly end to an ugly legal process. With the hearings complete, Kollar-Kotelly will likely issue a final ruling by the end of the summer.
The two sides' arguments weren't new. But when Kollar-Kotelly introduced an innovative concept, asking Microsoft to identify the "least onerous" parts of the states' remedy proposal, Warden refused to comply. "This proposed decree is fundamentally flawed," he explained. "We can't remedy any of this by changing a few words here and there. We can't fix it."

Warden seemed to misunderstand the question's importance. Clearly, Kollar-Kotelly was hinting that she was leaning toward adopting at least part of the nonsettling states' remedy proposal. But rather than identify which parts of the states' proposal would be the least damaging to the company, Warden chose to rebuke the judge for asking the question. It might prove to be a costly maneuver. States' attorney Brendan Sullivan suggested that Microsoft's refusal to budge is indicative of a wider problem. "I suspect Microsoft still doesn't get it," he told Kollar-Kotelly. "You're the only one left to tell them what it's all about."

Interestingly, Microsoft had a day to prepare for the judge's question. On Tuesday, Kollar-Kotelly issued an order that directed both sides to consider how their proposed remedies could be modified, a clear signal that she is considering a ruling that uses portions of both Microsoft's proposed settlement with the government and the nonsettling states' remedy proposal.

In sharp contrast to Microsoft's belligerent position, the states quickly identified their most important demand. The states told Kollar-Kotelly that the court should make Microsoft share software code with its rivals so that those companies can create products that interoperate with Windows as effectively as Microsoft's own middleware does today. This demand, said attorney Steve Kuney, is even more important than the states' request for a more modular Windows. Enforcing the demand would compel Microsoft to act "more like a company facing competition and less like a firm existing in a comfortable monopoly," Kuney said. "Somehow \[Microsoft thinks that it knows\] better than anyone else what's best for this PC ecosystem. What's good for Microsoft is therefore good for the economy, good for consumers, and good for everybody else."

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