"Breakup may be no-go, but Microsoft isn't off the hook yet
By Paul Davidson
USA TODAY
usatoday.com
"After being beaten about the head for two days by a skeptical appeals court, the government's antitrust case against Microsoft is clearly on life support.
But reports of its death may be premature. Although a trial judge's order to split the giant in two now seems doomed, experts say there is a reasonable chance the courts will impose milder but possibly still effective curbs on the firm's practices.
''I think (the government) still has a heartbeat,'' says William Kovacic of George Washington University Law School.
In biggest peril, legal experts say, are the breakup and some of the toughest curbs put on Microsoft's conduct by trial court Judge Thomas Penfield Jackson last June.
One of those curbs would have allowed personal computer makers to tinker with Microsoft's Windows operating system by replacing Microsoft browsers, music players and other ''middleware'' with competing products.
The seven judges hinted they will narrow the scope of the violations and send the case back to another judge to determine a more fitting penalty. Some curbs that stand a chance of surviving another review, experts say, include:
* Jackson's order barring Microsoft from punishing PC makers that bundle non-Microsoft products into their PCs.
Some PC makers, for instance, would like to bundle the Linux operating system along with Windows. That's because Linux is quicker at booting up, and some users like to be able to quickly check e-mail, says analyst Rob Enderle of Giga Information Group.
But PC makers are discouraged from bundling Linux because Microsoft charges at least $10 per machine for the privilege, he says.
* The order letting PC makers modify how icons appear on the first screen that PC users see -- which Microsoft has long controlled.
Freedom to change the screen could prompt some PC makers to promote, say, America Online, with AOL subsidizing the cost of the computer, Enderle says.
AOL has discussed making the Netscape browser, which it owns, a platform on which Internet-based applications could run. That could reduce the importance of Windows, Enderle says.
In fact, those sanctions were central to a proposed settlement offer last year that government lawyers seriously considered.
What's more, some government lawyers were skeptical about the proposed breakup, saying it would leave Microsoft's Windows monopoly intact.
Some experts expect a pro-Microsoft appeals court decision to prompt a President Bush-led Justice Department to settle with Microsoft. While the 19 plaintiff states have vowed to appeal to the Supreme Court, Iowa Attorney General Tom Miller said recently he is open to settlement talks. ''There's nothing magical about a breakup.'' He said prosecutors could be receptive to sanctions ''that change how they leverage their monopoly.''
But Ken Wasch, president of the Software and Information Industry Association, says Microsoft's conduct cannot be effectively monitored. Only a breakup will restrain it as it seeks to leverage Windows into new markets, such as hand-held computers and corporate servers, he says.
Prosecutors say a breakup could be upheld even if the appeals court strikes down findings that Microsoft illegally tied its Web browser to its Windows software and tried to monopolize browsers.
Lawyers close to the case point to signals that the court may be willing to uphold at least part of the central claim -- that Microsoft illegally fended off challenges to its Windows operating system.
Yet Bob Lande of the University of Baltimore Law School says Microsoft could win on that score, too. ''I think they have a 50% chance of totally walking,'' he says. Kovacic gives that possibility a 20% shot.
During the hearings this week, the U.S. Court of Appeals skewered Judge Jackson for holding just one hearing on the breakup order and granting press interviews that at least lent the appearance of bias.
Some judges also wondered if Microsoft was simply being a tough competitor. Chief Judge Harry Edwards said Microsoft's intent, even if nefarious, might not matter in light of his doubts about the viability of the threats to its monopoly. Still, the judges expressed concerns about Microsoft's hard-nosed tactics, especially with PC makers." |
