But in a tersely worded 207-page ruling, Judge Jackson seemed to have done just that. In the course of his tome, bound by the Government Printing Office and instantly downloaded by thousands of Internet looky-loos, he slickly mounted one tousle-haired, bespectacled billionaire’s noggin on the halberd of the evidence. Presumably these findings of fact are only a prelude to the actual ruling of law expected early next year. But considering that Judge Jackson documents at length how Microsoft is a monopolistic violator that not only bullies its competitors but also rips off the public by stifling innovation and overcharging for its software, there’s little doubt about his subsequent ruling. Bring me the head of Bill Gates!
Here are some of Jackson’s facts: the way to determine whether Microsoft is a monopoly is not the overall computer marketplace but only the market for Intel-compatible computers that are almost solely Microsoft’s domain. Therefore Microsoft is a monopoly. What’s more, the monopoly is self-sustaining and unlikely to be challenged. (Forget about those threats from Linux software, Internet computers or palmtops.) Even Microsoft’s huge expenditures on R&D don’t mean that it’s providing innovations for customer benefit: it’s done to “push the emergence of competition even farther into the future.” In fact (as the judge has it) Microsoft’s actions “have harmed consumers in ways that are immediate and easily discernible.” By suppressing the competition, he concludes, Microsoft has made computers less innovative, more expensive, more troublesome and harder to use–all to the detriment of the schmoes behind the keyboard.
This last contention pleased the government the most. Many observers had believed that the trial established how a Microsoft monopoly bulldozed its competitors. It was a shakier proposition whether computer users suffered from Microsoft’s actions. But Judge Jackson concluded that even building Internet software into Windows, gratis, was no bonanza for consumers. It made the system run slower, he griped, and caused more crashes.
The Feds, of course, were exuberant. “This is a great victory for consumers,” crowed Attorney General Janet Reno. Before going to bed on Friday, the wife of Reno’s hired litigator, David Boies, told him, “Today was a great career for you.”
It was also a banner day among the legions of Microsoft haters in Silicon Valley. “It’s a vindication of what we’ve been saying all along,” says Jim Barksdale, former CEO of Netscape, who rates Judge Jackson’s handiwork, “11 on a scale of 10.” Some Microsoft critics didn’t even wait until the bits were downloaded before declaring that the only proper judicial remedy for such misdeeds was a dismantling of the Campus That Bill Built. Bill Campbell, the acting CEO of Intuit, declared that “nothing short of a lasting structural remedy might suffice.”
And how did the alleged monopolists respond? In what could have stood for a paradigm of Microsoft’s tone-deafness throughout this legal and public-relations debacle, it offered a not-very-convincing declaration of business as usual. Bill Gates–who has privately raged about the government’s attacks on him–took apparent pains to appear only mildly perturbed. Rushing back from a semiannual “Think Week,” where he brainstorms Microsoft’s future moves, he offered a boilerplate reaffirmation of his company’s virtues. “Microsoft competes vigorously and fairly,” he said. It gave the impression of the owner of a burning house insisting that the foundation was sound.
More telling were the comments of Microsoft’s chief lawyer, William Neukom. After reluctantly admitting that the judge’s fact-finding “was more consistent with the government side than ours,” he spoke about where Microsoft obviously believes the case is going–to an appeals court. The only time Neukom became ruffled was at a question about all the competitors’ now predicting that Judge Jackson will play sushi chef, chopping Microsoft into slices of tekka maki business units. “Relief, if any, has to be commensurate [with the violations],” said Neukom. “What does structural relief have to do with [the judge’s conclusions]?”
In some respects, Judge Jackson’s brief was reminiscent of the notorious Starr Report. Not that the judge veered toward sensationalism; he studiously avoided recounting the numerous humiliations of Microsoft’s witnesses by the government’s grand inquisitor Boies. But like Ken Starr’s heavily tilted brief, “Court’s Findings of Fact” reads like a narrative driven by a central character whose actions are invariably cast in the worst possible light. During the trial Microsoft’s lawyers continually warned observers not to read too much into the government’s apparent success in coming up with incriminating e-mail or memos. These were just “snippets,” we were told, trivia that would not tilt the judge away from what Microsoft considered the bedrock truth of the case: it played hard but fair. But now it seems clear that Jackson determined that Microsoft’s witnesses were simply not credible, and in the “Rashomon”-like contradictions that arose, Jackson almost invariably preferred accounts coming from the government side. As a result, he wrote “a Reader’s Digest version of the government’s findings of fact,” says William Kovacic, law professor at George Washington University.
The judge even found misbehavior in actions that Microsoft lawyers considered obviously justifiable competitive practices. Could Microsof’t’s decision to give the Explorer browser away possibly be an expression of Internet economics and an effort to please customers? No, it was done solely to crush Netscape.
How much is Microsoft hurt by this? Judge Jackson’s compelling litany of misdeeds will be difficult to refute, try as it might both in the law courts and in the court of public opinion. During the trial, the government trotted out witnesses testifying to various alleged abuses of Microsoft’s power, giving the impression that Microsoft was a serial mugger, bopping Apple on the head to get it to carry its browser, sticking a gun in Intel’s ribs to make it back off a potentially competitive software effort and punching Sun Microsystems in the gut in order to wrest control of Sun’s Java software. But the narrative thrust of the document portrays Microsoft’s brain trust as a conniving illuminati, pulling strings and shattering legal boundaries in a consistent strategy to maintain its crooked monopoly by any means. Loaded with specific dates, imbued with a newfound grasp of technical niceties and backed not only by testimony but often damning e-mail, the judge weaves a series of vignettes where Microsoft forced its partners to structure business dealings to promote the company’s internal goals.
It’s a characterization that Microsoft vehemently denies. And though it’s very difficult to challenge findings of fact, Microsoft is expected to try. If so, it will probably start by questioning the judge’s overall approach–which consisted mainly of adopting the points of view of government witnesses without specifically explaining why Microsoft’s witnesses weren’t credible. It will question why the judge found as factual certain items that were arguably not admissible. (Possible example: a Bill Gates quote dismissing AOL as a competitor–its source was not sworn testimony but the margin-scrawlings of an unnamed Microsoft employee.) It will likely charge that the conclusions that the judge made weren’t backed up by incontrovertible facts. And it will almost certainly claim that Judge Jackson is acting as a czar of software design in robes: a role that an appeals-court ruling deemed inappropriate for jurists.
Whether the appeal works, it will buy time. Microsoft counsel Neukom joyfully recounted how long it would take to exhaust every avenue. By the time, he figured, that the Supreme Court got hold of the matter it would probably be 2003. He didn’t mention it, but long before then the new president taking office might have replaced Joel Klein with a trustbuster who views Microsoft more sanguinely. When George W. Bush addressed an audience of high-tech executives in Arizona last month, he promised them less interference from Washington, vowing to “always take the side of innovation over litigation.” One of Bush’s highest-profile supporters is Microsoft chief operating officer Bob Herbold, who has hosted the candidate on the company’s campus.
However, even if Microsoft manages to stave off judgment in the appeals process–thus allowing it to continue its world-championship run-up of profits and record market valuations–an unfavorable verdict may encourage the company’s unhappy competitors to launch their own civil suits against Microsoft. “I think and hope that it will happen,” says Sun Microsystems general counsel Michael Morris. The list of potential litigants includes AOL, the online giant that bought Netscape, the prime casualty of the browser war. One insider confirms that AOL’s board of directors is aware that seeking damages might be considered by shareholders as a fiduciary responsibility. “The only way Microsoft can limit their exposure on that is to settle quick,” says Jamie Love, director of the Consumer Project on Technology.
If Microsoft does come to the table, it better be prepared to make concessions that actually limit its powers. In the last year, says California A.G. Bill Lockyer, “when there were very preliminary discussions of a settlement, Microsoft’s offers were always very, very lowball offers.” But after Microsoft’s Freaky Friday, the price just got higher.
