By Siobhan Kennedy
Microsoft Corp said Tuesday that the Government’s key findings in its case against the software giant had failed to prove any of its claims and amounted to nothing more than additional rhetoric. Both sides handed over their findings of facts to judge Penfield Jackson Tuesday, each side submitting documents of around 450 pages in length, which they believe highlight the key facts that they managed to prove during the trial; facts which they hope judge Jackson will be so swayed by that he will include them as part of his summing up later this year.
Soon after the Department of Justice released its findings, Microsoft spokespeople were out in force attacking the document. It appears to be a proposed finding of assertion, rather than facts, said one spokesperson. It doesn’t appear to be based on evidence…not on the documents presented in the trial. He added: It’s just additional rhetoric…a lack of the true facts that the government needed to help prove the essential claims of its law suit.
In its summing up document, the government asserted that Microsoft has engaged in a broad pattern of unlawful conduct with the purpose and effect of thwarting emerging threats to its powerful and well-entrenched operating system monopoly. It effectively divided its facts into four main parts: those which proved Microsoft’s monopoly power, its motivation for retaining it, its conduct and the consequences of that conduct.
The DoJ said that Microsoft’s operating systems account for an overwhelming share – well over 90% – of the PC market. Microsoft’s customers, computer manufacturers and PC users, have no commercially viable alternative to the Windows operating systems, it said. Using facts drawn from evidence given in written and live testimony, the DoJ said that Microsoft saw a threat to its Windows operating system from the browser market, notably Netscape, and from Sun Microsystems’ Java programming language as well as from other software applications. The software giant realized that the those companies posed a threat to its dominance in the desktop market and set out to forestall them.
First, the software giant tried to invite those competitors, namely Netscape, to collude with it by agreeing to carve up the browser market between the two companies. When Netscape refused, Microsoft bundled its internet explorer (IE) browser with Windows 95 and 98 to disadvantage its rival. It also signed a number of exclusive deals with manufacturers, internet service providers and content providers to discourage them from using the products of its competitors, namely Netscape’s Communicator browser. On top of that, it gave away copies of IE for free.
The DoJ said that Microsoft’s actions severely impeded competition and that, in turn, injured consumers. Furthermore, it said it proved that the AOL/Sun/Netscape alliance has done nothing to cure those problems.
But Microsoft stuck to it guns claiming that there was no proof of any consumer harm only abundant consumer benefit. The antitrust laws, it said, are designed to protect consumers, not to prop up less efficient competitors. In its summary document, the software giant said it proved the integration of internet functions into the Windows operating system has clearly resulted in better technology, more rapid innovation, greater availability of browsing technology and dramatically lower prices.
It said the decision to include IE within Windows was driven by the needs of consumers, software developers and computer manufacturers and was not, as the DoJ states, an unlawful tying of two separate products. Moreover, Microsoft said the evidence shown in court proves it had begun work integrating the products way before Netscape even existed. At the same time as Netscape was complaining to the government about Microsoft’s supposed foreclosure it was also boasting to AOL that it had virtually unlimited distribution for its technology.
But above all, Microsoft seemed to center most of its arguments around its belief that the company faces intense competition from a wide range of platform competitors, including AOL, Sun, IBM, Linux, Apple, as well as non-PC devices and the internet itself.
What seems to be most striking is Microsoft’s assertion that it started out with, and continues to rely on, the dynamic quality of the market, said Bill Kovacic, an antitrust professor at George Washington University. It spends a great deal of its arguments concentrating on the fast changing nature of those relationships. Those points could be convincing but it’s unlikely to be as convincing when it comes to monopoly arguments.
Rich Gray, a Silicon Valley attorney who has followed the case agreed. On monopoly power, it [Microsoft] did a good job of discussing the facts to prove its case, but I still think that’s a losing argument for Microsoft. But Gray added that a lot of the arguments the government used to portray Microsoft’s behavior as being predatory didn’t seem that predatory at all. Gray said: It just seems like good old business sense to me, to give price cuts to people who help you market and sell the products that you want to sell.
Kovacic said the strongest components of the DoJ’s findings were its facts about Microsoft’s monopoly power and the evidence it had unearthed to prove the giant had deliberately entered into exclusive agreements with the purpose of crushing Netscape. But how much of that will ultimately persuade the appeals court is another thing, he added.
Kovacic said these first proposed findings of facts, while important, were merely Microsoft’s and the DoJ’s first chance to shout past each other. Now both sides have to produce revised findings, based on the other side’s arguments, by September 10. It’s those revised documents that will really engage the arguments more directly, he said.
The DoJ and Microsoft will use their respective revised findings as the basis for their summing up arguments, to be heard in the Washington courthouse on September 21. In turn, Judge Jackson will use those summaries to write his own findings of fact, which should be released about a month later.
