Karin, I wouldn't argue with your summary of Microsoft's defense, but legally there are some holes in it. Microsoft still seems to be arguing the consent decree case, and this isn't the same thing.
Quote from an old story, reporting on the D.C. Appeals court ruling on the consent decree matter:
However, Bill Gates should hesitate before he pops the champagne. Whether or not Microsoft indulged in “tying” is not the key point at issue in the broader case. True, that question matters because the DoJ believes that Microsoft has used tying as a tactic to maintain its market power. More important, though, is whether, as a monopolist, Microsoft has behaved in a way that is inconsistent with its legal responsibilities. The appeals court did not deal with this charge. Mr Gates, writing in The Economist two weeks ago, also dodged the issue. Yet the evidence, much of it in the form of emails sent by Microsoft employees, is disturbing.
The appeals court acknowledged one important point: that the installed base of Windows software “constituted an exceptional advantage and created exceptional risks of monopoly” and that the “widespread use of multiplatform browsers as user interfaces has some potential to reduce any monopoly-increasing effects.” That could prove significant, given that Microsoft bitterly contests the fact that it even has a monopoly. As for Mr Gates, he dismissed a mountain of evidence concerning Microsoft's intentions as a “handful of statements—many by relatively junior staffers—that can be taken out of context to paint a misleading picture.”
Apart from the indisputable fact that many of the emails collected by the DoJ are from Microsoft's most senior officers, the picture they paint is actually quite clear. They reveal that Microsoft was extremely rattled by the success of Netscape's Navigator browser, seeing it as a threat to the dominance of Windows, especially when combined with the Java programming language, which can work with any operating system. Rather than let the market decide between rival approaches to computing, Microsoft used the distribution muscle of Windows and its financial clout to persuade PC makers, Internet service providers (ISPs) and others to push its own browser instead. The emails show, too, how Microsoft devised a strategy to undermine the most important claim for Java: that applications written in Java can run anywhere. Put together, such evidence constitutes a tough charge against Microsoft. (from economist.com
And from a more current article:
Microsoft's defence is, in essence, fairly straightforward. It wants the case focused on product integration, partly because this is vital to the way it does business, and partly because it reckons that on this question the appeal court may be on its side. The firm will contest the meaning of some e-mail evidence and deny accusations that it colluded to divide markets. It will portray most of its actions as little more than vigorous competition. Finally, it will claim, using evidence from a forthcoming book by two academics, that Netscape was the chief author of its own misfortunes.
Microsoft is also prepared to spin out the case. The District of Columbia appeal court overturned an earlier injunction handed down by Judge Jackson. So long as there was a chance of consumer benefit, the court was reluctant to rule against Microsoft's integration of the browser with the operating system. Microsoft hopes that a similarly conservative panel will hear its appeal if, as it fears, Judge Jackson finds for the government this time. The Supreme Court is harder to read, but most of its judges, appointed during the Reagan-Bush era, are inclined towards laisser-faire.
Yet the case against Microsoft remains compelling. The government will describe in detail a pattern of “predatory and exclusionary” practices illegally carried out over many years, often aimed at intimidating partners as much as competitors. At the very least, Microsoft's belief that other firms do the things it is accused of demonstrates a refusal to concede that, under antitrust law, monopolists should be whiter than white. (http://www.economist.com/editorial/freeforall/10-10-98/wb9637.html)
Of course, the wise Microsoft investor, knowing the value of a good monopoly, would prefer Microsoft be blacker than black. To quote a frequent participant here in bygone days, "It's unethical to be ethical in business".
The Supreme Court may indeed side with Microsoft, if it gets there, though the SC Justices are a bit less ideological that at the lower levels of the federal bench, where confirmation scrutiny isn't as intense. I'm sure you could get 3 votes on the SC to declare the Sherman act unconstitutional, but I wouldn't bet on more than that.
Cheers, Dan. |
