Microsoft Corp appears to have got the better of yesterday’s appeal hearing in the antitrust suit brought against it by the Department of Justice. It was aided by two out of the three judges appearing more Redmond than Washington, a questionable performance by the DoJ’s lawyer, and some bad public relations work by the DoJ. US Circuit Judges A. Raymond Randolph, Stephen F. Williams and Patricia Wald heard the appeal. No decision is likely for at least two weeks, and possibly for anything up to about three months. Randolph and Williams – both Republican nominees – appeared to be more favorable towards Microsoft, while Wald, a Democratic appointee of Jimmy Carter mainly leaned the other way. The central issue is the integration of Internet Explorer with Windows 95 and that whether or not forcing personal computer manufacturers to include the browser with the operating system is illegal. Judge Thomas Jackson, who is hearing the actual case, issued a December preliminary injunction against Microsoft, which forced it to offer PC makers a version of Windows 95 without the browser. The DoJ charged that Microsoft then violated that ruling by offering an old version of Windows 95 that basically didn’t work. A January 22 hearing found that to be the case and Microsoft provided a working version. Yesterday’s appeal was for the entire case involving Windows 95, and any ruling will obviously have an effect on Windows 98, which is due to ship to PC makers on May 15, with an expected roll-out on June 25. However, speaking the night before the appeal on CNN’s Moneyline, Bill Gates would not commit to a shipping date, merely saying I think it’ll be ready to go out the door very, very soon. Redmond’s lawyer, Richard Urowsky, yesterday said that not a single OEM was supporting the version of the OS without the browser, which is hardly surprising as Microsoft made it the same price as the integrated version. Urowsky, focusing on procedural issues, also said Judge Jackson was wrong to have issued a preliminary injunction without warning Microsoft that it was a possibility. The DoJ’s lawyer Douglas Melamed said the DoJ didn’t have to ask for one as it was implied. Even Judge Wald – the sympathetic one – told Melamed bluntly he was wrong to assume that. Judge Randolph focused on the meaning of an integrated product and Urowsky offered up Windows NT, Word and Office as example of products that are not integrated. Urowsky told the panel that Microsoft had the right to tell its OEMs what to integrate and what not. Similarly, the DoJ’s Melamed faced semantic questions about integration. He was asked how the browser and OS are separate products if they share so much of a common code base. Melamed said because they are sold separately while also being integrated. He pointed out that Word also shares some of the code base, but is not integrated. Then the bit of bad PR: when it won the January victory, it stood at chatted for about 30 minutes, but this time the DoJ had no comment. Instead, Bill Neukom, Microsoft’s senior VP for law and corporate affairs was the one standing outside telling reporters that the argument presented by our counsel went very well. We think the panel’s questions indicated they are well-informed and are taking this matter very seriously. However, this case could well be overtaken by further suits from the DoJ and at least 11 state attorney generals, who are preparing cases and threatening to bring them before May 15. It seems this one will run and run.
