MS to face spate of lawsuits if it loses the big one

And we name the mysterious source close to Microsoft


MS on Trial "A Microsoft lawyer", meaning Bill Neukom, has been giving unattributable briefings to media friends before Microsoft files its proposed findings of fact tomorrow. The main news seems to be that Microsoft has failed to come up with anything new to help its case, while the Department of Justice is sensibly not saying what is in its brief. But Neukom has reason to spin hard - if Microsoft goes down against the DoJ, the result could trigger a spate of private antitrust actions. Neukom claimed that Microsoft "did a lot to help [Netscape] to get their browser out for Windows"; repeated the joke about Microsoft wanting to retain the "right to innovate"; and maintained that there is "vigorous competition" in the browser market. AOL was being portrayed as "a competitive threat to Microsoft" and the portal services said to "represent a platform challenge", but it is unlikely that Judge Jackson views AOL and portals as challengers to Windows. In any event, it looks as though there will be around a thousand pages of submissions on Tuesday. One problem area for the DoJ is that the judge's desire for speeding the trial prevented the DoJ's special trial counsel David Boies from refuting all the arguments introduced by Microsoft's witnesses. Microsoft will claim that it won all these unrefuted points, but the judge is most unlikely to agree. The DoJ will have the opportunity in a final brief to refute any such points made by Microsoft, with both sides filing by 10 September. Closing arguments will be heard on 21 September, but it is not yet known how long this will take. Not surprisingly Microsoft said that it was "open to a new round of settlement discussions", but it is unlikely to find DoJ antitrust supremo Joel Klein amenable to any settlement that did not look as though it would resolve the problems. In previous settlement talks in April and June both sides were too deeply committed to their positions to make this a realistic possibility. Microsoft's shots are called by President Steve Ballmer, COO Bob Herbold and Neukom, with Gates as an independent wildcard with a veto. The DoJ had some nasty experiences in May 1998 when it realised that Microsoft was a Janus, with one face in Washington (Neukom) negotiating, and the other face in the other Washington (Gates) changing the rules as the game progressed. The same thing had been found by Klein's predecessor, Ann Bingaman, when she tried to negotiate with Neukom, until she finally insisted on having Gates on the speaker phone as well, since he wouldn't leave Fort Redmond and lead from the front. More actions if Microsoft loses? Although the other current cases are unlikely to have much direct influence on the Washington trial, the real challenge that Microsoft faces is that if it is found to be a monopoly, which seems to be a near-certainty, and if this withstands appeal, it will find itself in locking horns with many companies in court in further antitrust battles. This time, its challengers would have the high ground. By delaying the start of the Caldera trial until January, Microsoft has put itself into the position where there will probably be a result in Washington before or during the Caldera trial, which could be very bad news for Microsoft. Gates could be considerably influenced towards a settlement by the prospect of Microsoft losing some major private antitrust cases. In the event of another consent decree, there would be no finding in law that Microsoft was an illegal monopolist, so making private antitrust cases more difficult, and hugely more expensive. By dividing his findings into two - on facts, and on law - it will be essentially impossible for any appeal court to refute Judge Jackson's decision about the facts, although Microsoft would no doubt try to achieve this, particularly any finding that it is a monopolist. The Court of Appeals, and/or the Supreme Court, will only be able to introduce its political bias over the judge's findings of law. The majority of appellate judges are against the enforcement of antitrust law, so another political decision is quite possible. This was previously seen when the Court of Appeals overruled Judge Stanley Sporkin's refusal to sign the consent decree, so ignoring the Tunney Act and the Sherman Act. It is no coincidence that so many senior Microsoft executives have either left or have gone walk-about. The shame and public ridicule that is likely to result from an adverse decision for Microsoft will make it a politically incorrect organisation. ® Complete Register Trial coverage


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