Pretty good take on the MSFT FOF:
The Microsoft Decision: Think
of It as a Head-Fake...
By Jim Seymour
Special to TheStreet.com
11/7/99 4:09 PM ET
With a half-dozen readings of U.S.
District Judge Thomas Penfield
Jackson's fact-finding ruling on the
Department of Justice's action
against Microsoft (MSFT:Nasdaq)
under my belt, one passage, buried
in Paragraph 412, almost the final
words in the decision, comes back to me again and again:
Microsoft has demonstrated that it will use its
prodigious market power and immense
profits to harm any firm that insists on
pursuing initiatives that could intensify
competition against one of Microsoft's core
products.
Get used to that line; I think you'll be hearing it a lot over the
next few months.
What really got me about Jackson's findings? It wasn't that
the decision went against Microsoft, though I think we're all
making more of this ruling now than we will be next week --
and more than the market will make of it Monday morning. It
was less the substance of the ruling than, time and again,
the venomous tone of Jackson's language.
And I think I know what he's up to.
Jackson's aggressiveness in
pinning the "monopolist" tag
on Microsoft was surprising for
most of us who have followed
this trial from the beginning.
We didn't expect Jackson to let Microsoft off; we did expect
him to reign in the attitude he had displayed from the bench
during testimony. The best word I can come up with for that
attitude? Harsh. And that's putting it in language suitable for
family reading.
Again, in Jackson's own words:
To the detriment of consumers, however,
Microsoft has done much more than develop
innovative browsing software of
commendable quality and offer it bundled
with Windows at no additional charge. As has
been shown, Microsoft also engaged in a
concerted series of actions designed to
protect the applications barrier to entry, and
hence its monopoly power, from a variety of
middleware threats, including Netscape's
Web browser and Sun's implementation of
Java. Many of these actions have harmed
consumers in ways that are immediate and
easily discernible. They have also caused
less direct, but nevertheless serious and
far-reaching, consumer harm by distorting
competition.
Enough? OK, you get the idea.
Why the harsh language? Was the judge really that offended
by Microsoft's lame defense? That convinced of the Evil
Empire's guilt?
It's important to remember that when lawyers, and by
extension, judges, say something, they don't necessarily
mean exactly what they say. I often recall a wonderful phrase
by Dicky Grigg, a distinguished plaintiff's lawyer, who
sometimes characterizes as "painted with the brush of
lawyer-talk" the earlier words of his opposing counsel in
closing statements to jurors.
Exactly. "Lawyer-talk" indeed. And just why might Jackson
have resorted to painting his fact-finding document with
such heavy strokes of lawyer-talk?
Think of it as a head-fake. Ahead lies the parties' responses
on how the law might apply to Jackson's findings, then,
much later -- if ever -- Jackson's proposed remedies. With
plenty of time along the way for negotiations between the
parties.
I think what Jackson was really saying to both sides was
something like this:
OK, Microsoft screwed up here. Period. Done.
Now I want you two to sit down and finally get
serious about negotiating some changes in
Microsoft's behavior -- a consent decree that
works. I don't want this case to get as far as
my proposed remedies. I want the answer to
come from you two.
Justice, I've given you plenty of ammunition
here, a blunt warning to Microsoft that if I'm
pushed to actually come up with remedies
here, they will, by God, be tough. But don't go
crazy, Justice: Negotiate in good faith. Make it
work.
And Microsoft, listen up: You want to test me,
just blow off this chance to negotiate, and I'll
show you tough. I've laid all the predicate I
need in this finding of fact. Sure, you might
beat me on appeal, but push me and I'll give
you a black eye the public won't soon forget.
And when Justice pushes your appeal
straight through to the Supremes, as they can
in antitrust -- right over the heads of your
friends on the Circuit Court of Appeals --
you're gonna get clobbered. And then you're
stuck -- no more appeals.
Now sit down and negotiate, dammit. Both of
you, I want to get rid of this thing. Got it?
And that's just what I think is going to happen, by late winter
or early spring. Microsoft will agree to an exhaustively
negotiated consent decree, which it will of course
characterize as unfair but something it can live with, the best
course for its shareholders.
The DOJ's Joel Klein & Co. will hold another press
conference, even more embarrassing than the little piece of
kabuki theater they staged Friday night. No one's above the
law, justice prevailed, consumers were saved, etc., etc.
Phony as a three-dollar bill, but inevitable.
And Judge Jackson's little fake will have worked. He won't
have to wrestle with the demons of remedies, already being
condemned in Congress and the press. But he'll have
achieved maybe 75% of his purpose.
A head-fake indeed. Just like Michael Jordan or Troy
Aikman. Misdirection, execute, desired result. And maybe
then, finally, this ugly, foolish and incredibly wasteful
exercise will be over.
Jim Seymour is president of Seymour Group, an
information-strategies consulting firm working with corporate
clients in the U.S., Europe and Asia, and a longtime
columnist for PC Magazine. Under no circumstances does
the information in this column represent a recommendation
to buy or sell stocks. At time of publication, neither Seymour
nor Seymour Group held positions in any securities
mentioned in this column, although holdings can change at
any time. Seymour does not write about companies that are
current or recent consulting clients of Seymour Group. While
Seymour cannot provide investment advice or
recommendations, he invites your feedback at
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