Maybe you're right: they've gotten to the point where they've started believing their own propaganda.
Nevertheless, regardless of what Neukom is doing and/or telling Gates, Microsoft's outside counsel should know better. That's why companies hire outside counsel instead of just having in-house counsel do everything. Since outside counsel is not subjected as often to doses of company propaganda, and since they do not depend so much on the company payroll for their daily bread, they are supposed to provide independent and detached advice and evaluation, which is supposed to act as a counterweight to the company line the in-house people will be expected to give. I assume Sullivan & Cromwell understands that this is its role; I assume Sullivan & Cromwell is not slouching on the job and are performing that function here. So I ask again, What gives?
Regardless of one's feelings about Microsoft, reading all the Dow Jones and other news releases about how Boies is cutting Schmalenese to pieces really is depressing for anyone who practices the defense trial lawyer's craft. I mean, it really sounds bad. Even the most cursory perusal of the news stories of the past few days leaves a bad impression:
1. Schmalenese testifies for Microsoft in *all* their antitrust cases, including the one where he used a definition of the relevant market which is at odds with the one he is using here. To the uninitiated, that makes it sound like Schmalenese is a litigation whore.
2. Schmalenese said in some law review articles in the '80's that the only true test of the likelihood of potential competition in any given marketplace is for there to emerge an actual, substantial market competitor, something he conceded has not happened in Microsoft's case. One can certainly debate the truth of both the earlier statements and of the concession, and one wonders why Microsoft picked this economist out of all the economists in the world to make its potential competition argument given his damning past writings on the subject. So, this litigation whore changes his story to suit the needs of the moment. Plus, whoever hired him for this case did not do their homework. (Or maybe it's a case of sabotage??? ;) )
3. Then, Schmalenese was confronted with some testimony he gave in, I believe it was the Control Data case, in which he said that network externalities and the so-called "applications barrier" presented substantial barriers to entry into Control Data's software market. Now, of course he distinguished that market from Windows by saying that in-house software developers had to develop their own applications on the new platform, whereas commercial applications developers have to do it in the case of Microsoft's OS competitors. However, it will not take a knowledge of rocket science for the judge to figure out that the market price of commercial software largely consists of the capitalized costs of the same kind of software development that software engineers had to do in house in the Control Data case. Although economies of scale will spread the cost of development over a larger base of users if the commercial software is successful, the concession on the issue of principle has been made.
And, for the truly sadistic, here is today's installment:
dailynews.yahoo.com
Here is just one "choice cut" from among the many, and not even the best one at that:
Boies presented a Dec. 22, 1995, internal memorandum from employee Jeff Alger arguing that Microsoft should bargain with another software maker by saying Internet Explorer was not a part of the operating system.
Schmalensee said he did not know who Alger was and dismissed the memo. But he acknowledged that he had seen the memo before and never bothered to find out whether Alger's suggestion was used in the negotiation.
Pathetic.
I mean, how much longer does this agony have to go on? The government apparently originally said its cross-examination of Schmalenese was supposed to end at noon tomorrow, not a moment too soon for Microsoft, undoubtedly. But, then, Boies said today went more slowly than expected. So now, it looks like maybe it won't end until the end of the week. |
