BUSINESS
ANTITRUST SUIT PICTURE COULD CLEAR UP SOON
WARREN WILSON P-I Reporter
05/21/98
Seattle Post-Intelligencer
FINAL
Page E1
(Copyright 1998)
The antitrust lawsuits filed this week against Microsoft Corp. might take years to resolve, but their basic course could be set in the next few months, observers say.
Even with quick action, however, the lawsuits aren't expected to interfere with the launch of Windows 98, the updated operating system scheduled to be available to consumers June 25.
The first big decision facing U.S. District Judge Thomas Penfield Jackson will be on the Justice Department's request for a preliminary injunction that goes to the heart of the case.
It's unlikely he will rule on that request before the end of June, antitrust lawyers said. And even if he agrees with the government that a violation has occurred, a workable remedy will be difficult to craft.
The government wants Jackson to force Microsoft to let computer makers remove the Internet browser function from Windows, or include competitor Netscape Communications' browser along with its own.
It also wants him to bar Microsoft from putting restrictive or exclusionary terms in contracts with its business partners, and to force the company to give computer makers more freedom to modify the Microsoft software they buy.
"The action is going to be over the scope of the injunction," according to Washington, D.C., antitrust attorney Phil O'Neill.
"If the judge grants narrow relief, Microsoft is going to be the clear winner, because that will be the standard for a couple of years while the whole case goes on."
Jackson has scheduled an initial hearing in the case for tomorrow, but a quick ruling is doubtful.
Both sides will likely ask for time to exchange information, O'Neill said, and Jackson will be inclined to grant it because of the criticism he took for refusing it in an earlier case that is still before a federal appeals court.
In that case, the Justice Department accused Microsoft of violating a 1995 consent decree, citing many of the same actions as in the new case, which is based on the Sherman Antitrust Act.
The appeals panel is expected to rule soon on Microsoft's appeal of the injunction Jackson granted in the first case in December. The two proceedings are technically separate, but its ruling will be studied closely.
"It's very likely that in the course of the opinion, they'll say a number of things that are highly relevant," said Charles Rule, the former head of the Justice Department's antitrust unit who now represents Microsoft.
"Presumably, Judge Jackson will be very attentive."
"I guarantee you, he's going to read the appeals opinion very carefully," O'Neill said. "He's been reversed a few times in some very high-profile cases, and he doesn't like it."
"You can be sure that the next time . . . he will work very hard to get right - to get it appeal-proof."
That could work to Microsoft's benefit. While Jackson has seemed to favor the government's view, the appeals court has seemed more sympathetic to Microsoft.
Last week it ruled in Microsoft's favor in finding that the December injunction did not apply to Windows 98.
Microsoft was particularly heartened by the last sentence of the order, in which the appeals panel said that blocking Windows 98 would "put judges and juries in the unwelcome position of designing computers."
Legally, it matters little whether Jackson rules quickly on the preliminary injunction, O'Neill said.
Even if he ruled against Microsoft two, three or four months after Windows 98 is released, "it's still fairly early in the game" in terms of the product's life cycle.
Rule said that whatever its timing, the government isn't likely to win a preliminary injunction.
"All you're supposed to be doing is freezing things as they are, so irreparable harm doesn't occur," he said. "The difficulty with what the government is asking for now . . . is that it can't in any way be said to be preserving the status quo."
O'Neill said he believes the government has prepared a solid, focused case. The challenge, he said, will not be in proving an antitrust violation but in deciding what to do about it.
"How do you cure the violation, in ways which would not be deemed intrusive?"
Without conceding any antitrust violation, Rule argued that the government's proposals are unworkable.
Asking that Microsoft be forced to ship Netscape's browser "makes most antitrust lawyers scratch their heads," he said.
Another proposal, that Microsoft cut its royalties for computer makers who delete some of its software, would also pose problems.
"It would essentially require the courts to set a price for Internet browsing software . . . something that no court, under any antitrust decree, has ever done," he said.
Fast-changing technology could render the entire case moot, O'Neill said. If that happens, whoever follows Joel Klein as antitrust chief "will probably not have trouble pulling the plug."
P-I reporter Warren Wilson can be reached at 206-448-8032 or warrenwilson@seattle-pi.com
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