Tom Regan
Microsoft, on the ropes, might throw in the towel in battle with DOJ
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Like a bruised and battered heavyweight prize fighter who has survived a brutal round and is just glad to get back to his corner for a rest, Microsoft lawyers and officials must be glad for the month-long recess that has taken the place of the almost daily pounding the software giant was taking in its anti-trust lawsuit in Washington.
In fact, Microsoft may be willing to end the fight altogether, after the Federal Trade Commission and chip-manufacturer Intel reached an agreement on Monday. The agreement removed the likelihood that Intel will be dragged into court, like Microsoft, to deal with anti-trust allegations.
So how badly have things been going for Microsoft?
On the last day of the trial, brought against the company by the Department of Justice (DOJ) and 19 states, Judge Thomas Penfield Jackson lost his temper with Microsoft’s final witness. Jackson, apparently tired of Microsoft’s arguing over semantics, interrupted Senior Vice-President Robert Muglia and said that his interpretation of a memo from Bill Gates -- in which Gates said he was ‘hardcore’ about not supporting Sun Microsystems’ Java Developers Kit (JDK) -- was wrong. When Muglia (who had said that Gates was not opposed to supporting JDK) tried to continue, the judge ordered him to stop and called a recess.
It was the latest in a series of solid blows that has left many trial watchers convinced that the Department of Justice has Microsoft on the ropes.
David Boies, the government’s lead attorney, has been particularly successful at catching Microsoft lawyers off-guard.
For instance, Boies noticed that a video tape provided by Microsoft -- which showed the effects of software that removed the Internet Explorer browser from the Windows operating system, a move that Microsoft claimed negatively affected the system -- came not from one computer as the company said, but from two different computers. When Boies revealed this in court, Microsoft officials were left scrambling to explain what looked like an attempt to mislead the court. (Microsoft said the mix-up happened by mistake.)
Even worse, a major software-industry lobbying group last week recommended a restructuring of Microsoft if it loses its case. In a confidential report leaked to the media, the Washington-based Software Information Industries Association said the court should consider a restructuring that would require no oversight in a lightning-fast industry and one that would not hurt Microsoft employees or shareholders.
Microsoft’s view of the proceeding has remained consistent. Company lawyers and officials insist they are winning the case, and that the government has failed to prove any of the charges. General Counsel William Neukom has repeatedly told the media that Microsoft has built a “solid record of evidence” that shows the company has done nothing to harm consumers.
And regardless of the outcome, almost everyone following the trial believes Microsoft will appeal if it loses the case, and will fight any sanctions placed on it.
What sanctions might the government place on a beaten Microsoft?
While the lobbying group mentioned above called for a complete restructuring, it’s more likely that the government will concentrate on specific remedies. The one mentioned most often is a move to weaken Microsoft’s hold over PC manufacturers.
That may be why Microsoft, despite its insistance that it is winning the case, is now thinking about reaching a settlement of its own. Tuesday’s Seattle Times reported that Microsoft and the government are exploring ways to settle the anti-trust lawsuit before the trial resumes in mid-April. The Times quotes a source close to the case as saying, “It makes sense to explore settlement discussions.”
If the rumors are true, then it seems the heavyweight champ will throw in the towel before climbing back into the ring with the government, and spare itself a serious, quite embarrassing defeat.
(For more background on the case, see 'The Trial')