Microsoft should have challenged the erroneous belief of the Appeals court judges that distribution of software by pre-installation or by integration with the O/S are the only two cost efficient methods of distribution. The AC judges were not technically savy enough to realize that DOWNLOADING is easy, fast, and cheap; and often a more cost effective method of distribution. 50% of Navigator’s usage was obtained by downloading; and 160 million copies of Navigator were distributed; more than one copy per Internet user. At least Judge Posner knows that “software is increasingly shipped to the purchaser over the Internet….not just for computer software but for Internet-based businesses.”
“The new economy presents unusually difficult questions of fact, such as where a plaintiff complains that the defendant has changed the interface to make it more difficult for the plaintiffs product to work with the network, .....these questions are very technical and difficult.” ”It is difficult to find truly neutral competent experts to advise the lawyers judges and enforcement agencies on technical questions in the new economy. There aren't that many competent experts, and almost all of them are employed by or have financial ties to firms involved in or potentially affected by antitrust litigation in this sector. It is difficult to find a consultant in the new economy who is both competent and disinterested.” Amen
From: “Antitrust in the New Economy. Richard Posner 68 ANTITRUST L.J. 930 (2001).
Microsoft should have challenged the Appeals Court reliance on novel theories of exclusionary conduct, that were created by Dennis Carlton; one of the original participants in Project Sherman, and the most widely respected and influential member. According to John Heilemann, Dennis Carlton was part of a very secret panel assembled by Sun Microsystems to create an antirust-case-for-the DOJ-to-file…with different scenarios, theories, cases, remedies, economic model. "Pride Goes before the Fall" by John Heilemann and Wired: The Whole Truth ... and nothing but the Truth" wired.com
I wonder if Judge Posner knows or if the Appeals Court judges know this? Ironically Posner acknowledges and thanks Dennis Carlton in that paper on the first page.“Antitrust in the New Economy. Richard Posner 68 ANTITRUST L.J. 930 (2001). IMO, Project Sherman not only convinced the DOJ to file antitrust charges, it influenced Judge Posner and the Appeals Court judges, imo. Sun Microsystems's Project Sherman worked better than they imagined,...a $3 million dollar investment by Sun in their future...
"As Morris (Counsel for Sun Microsystem's) intended, Project Sherman comprised a superstar group of antitrust authorities, including the famed Houston litigator Harry Reasoner; University of Chicago economist Dennis Carlton and several of his colleagues from the economic consulting firm Lexecon; Arnold & Porter chair and prominent Washington attorney Michael Sohn; Stanford economist Garth Saloner; and former FTC general counsel Kevin Arquit, who handled Sun's antitrust work in Washington. In choosing his experts, Morris took care to select people with impeccable credentials - mainstream credentials, Establishment credentials; the kind of people who spoke Joel Klein's language; the kind who might come across as reasonably objective despite the fact that Sun was paying them $600 to $700 an hour. The political sensitivity of the project was, needless to say, extremely high, for here was one of Microsoft's most ardent competitors bankrolling a costly endeavor to influence the DOJ - an endeavor undertaken with the department's encouragement. And so it was done in utmost secret." from *Wired The Whole Truth...etc by John Heilemann wired.com
From the Appeals Court decison: "However, we agree with plaintiffs that a monopolist’s use of exclusive contracts, in certain circumstances, may give rise to a § 2 violation even though the contracts foreclose less than the roughly 40% or 50% share usually required in order to establish a § 1 violation. See generally Dennis W. Carlton, A General Analysis of Exclusionary Conduct and Refusal to Deal—Why Aspen and Kodak Are Misguided, 68 ANTITRUST L.J. 659 (2001) (explaining various scenarios under which exclusive dealing, particularly by a dominant firm, may raise legitimate concerns about harm to competition).
“By ensuring that the ‘‘majority’’ of all IAP subscribers are offered IE either as the default browser or as the only browser, Microsoft’s deals with the IAPs clearly have a significant effect in preserving its monopoly; they help keep usage of Navigator below the critical level necessary for Navigator or any other rival to pose a real threat to Microsoft’s monopoly.” The threat from middleware was all speculative...as are Carlton's theory. Pure anti-Redmond propaganda but the AC judges bought it.
IMO, the Appeals Court judges repeatedly used Carlton's speculative theories to charge Microsoft with monopolization; in addition to their erroneous belief that distribution was barred when it was not. They agreed that excluding Navigator was one with the sole purpose to "divert enough browser usage from Navigator to neutralize it's use as a platform." "Microsoft offered no procompetitive justification for its exclusive dealing arrangements with the ISV's" blah blah blah
Microsoft did offer reasons; they just didn't believe them. Like Jackson, they believed that the purpose was anticompetitive.
Judge Posner seems to understand the complexities OF ANTITRUST better than the Appeals Court judges, imo. "Whenever an antitrust court is called on to balance efficiency against monopoly, there is trouble; legal uncertainty, and the likelihood of error soars." From: “Antitrust in the New Economy. Richard Posner 68 ANTITRUST L.J. 930 (2001).
IMO, Dennis Carlton’s novel theories of exclusionary behavior plus the Appeals Court judges erroneous beliefs about distribution of software, strongly influenced them and greatly contributed to their decision to uphold at least 6 charges of monopolization or violations of Section 2 of the Sherman Act:
They found monopolization in
1. Microsoft's exclusive dealings with IAP's another Carlton coup..
2. MSFTs exclusive deals with ISV's..another Carlton coup, imo..
3. MSFTs cash infusion allowing Apple to survive was in violation of Section 2; because it limited use of Navigator ... poor Apple users, those computer geeks...so incompent and incapable of downloading Navigator....what bullshit, another Carlton coup..imo.
4. Microsoft was guilty of monopolization for requiring use of it's JVM, not Sun's JVM; it protected their O/S monopoly from a "middleware threat".another Carlton coup
5. Microsoft monopolized by deceiving (poor stupid)developers into believing MSFTs JVM was cross-platform compatible; and MSFT did that only to preserve their O/S monopoly....another Carlton coup...
6. Microsoft's threats to Intel to stop developing JVM were exclusionary-aimed to preserve their monopoly... |
