DoJ's MS-busting budget a bargain – but what has MS spent?

Statement of costs shows great bangs per buck


MS on Trial The DoJ's action against Microsoft seems to have been something of a bargain. Total costs since 1989 have added up to a budget $12.6 million, or thereabouts. For the present case, in 1998 to February 99 (the period of the current action), costs were under $7 million. The sum was revealed in an answer to Senator Slade Gorton, who was probably disappointed. Gorton (Rep, Washington state) is a staunch supporter of home team Microsoft, and evidently thought that finding out how much the DoJ had spent on the trial would help the boys in Redmond. In fact it didn't, because in terms of the cost of previous antitrust cases, the money spent is modest, to say the least. The amount includes the first case that the DoJ took over from the FTC in 1993 that resulted in the consent decree; the second so-called contempt case; and the present case. FY 1998 costs were $4.8 million, and for FY 1999 to 26 February the amount was $1.62 million. In 1999 dollars, the cost of the IBM case, abandoned on instructions from President Reagan (never mind that the judiciary and executive are supposed to be independent), was more than $29 million. The Exxon FTC case cost about $30 million, and the AT&T case $34 million in 1999 dollars. Gorton's response was to claim that the money was misspent. Gina Talamona for the DoJ said that "we feel that the American public was extremely well-served". Lawyers are thicker on the ground in the US than discarded hamburger wrappings because in most cases successful litigants do not get awarded their legal expenses (there's also the fact that lawyers can take cases on a contingency fee basis, of course). The DoJ has asked that Microsoft pay its legal costs in this case, and its chances of getting them are probably increased by Gorton's ill-advised intervention. This is not the first time that Gorton has fouled things up from Microsoft. He described Judge Jackson as "a second- or third-rate judge" by way of trying to find an excuse for his inevitable conclusion that Microsoft had transgressed. The story made the headlines in the US. The states have refused attempts to specify how much they have spent on the case, but the amount is likely to be quite modest, since they do not have a large team. The DoJ has refused to say how much it paid its consultants, but we know that Professor Fisher was on $500/hour (and Microsoft's Dean Schmalensee on $800/hour). Steven Weadock admitted he was paid $100/hour. Gorton's demand for information also elicited that the DoJ spent $194,140 on public relations, most of which went on its Internet site. Fees for outside lawyers - mostly David Boies - were $213,731. David Boies initially agreed to a fee of half his $250 hourly rate, but later this was made into a pro-rata salary of $104,000. He estimates he is currently paid around $50/hour, but look at the clicks he is getting: he won't starve in the future. Everybody seems to be agreed that Microsoft has spent a very large sum on its defence. Microsoft refuses to discuss this, but looking at its accounts, legal costs probably increased around $200 million between July 1998 and June 1999, and about $50 million the previous year. This sum would include legal fees for all the cases where Microsoft is defending itself. We'd be surprised if Microsoft's true expenses so far for the present case were less than $150 million. Since Ballmer's remark about Microsoft's over-high share price cost him personally a billion dollars, this is chicken feed to the Redmond hen. ® Complete Register Trial coverage


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