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Microsoft and the U.S. Justice Department went head-to-head on Tuesday, Feb. 22, as they began to present final arguments in the company's anti-trust trial, in which the government accuses the world's largest software manufacturer of monopolistic practices and demands that Microsoft be slapped with sanctions.
Microsoft said last week that it believed a common sense settlement should be possible. However, the position of both Microsoft and the Justice Department remains so far apart that they have not met together with Judge Richard Posner, the mediator appointed late last year. "The possibility of an agreement is less than fifty-fifty, more like 30 percent," said William Kovacic, an expert in anti-trust law at George Washington University.
Kovacic believes that the negotiations between Microsoft and government attorneys have not been a total waste of time. "I have assumed the fact that if they've gone so far it's that they haven't been useless," observed Kovacic. "If they had been dead on arrival, we would have known that in January."
However, a more pessimistic outlook was quoted in The Washington Post last Friday when a source close to the negotiations said, "I am not optimistic about settlement... There can't be a settlement between now and Tuesday - it's just too late."
In his preliminary findings unveiled in November, Judge Thomas Penfield Jackson said the software giant had harmed consumers by exploiting its market dominance to squelch competition. Using uncharacteristically blunt language, Jackson wrote that Microsoft "through its conduct toward [competitors] Netscape, IBM, Compaq, Intel and others... 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." The judge found that such actions had caused serious and far-reaching consumer harm by distorting competition.
If the parties don't reach an amicable settlement, Jackson will have to make his official determination as to whether the anti-trust law has been violated in spring. Should that happen, the ruling will be followed by hearings to determine what sanctions should be applied.
Options under consideration include a break-up of Microsoft into two or more companies. The software giant could also be forced to license the base code for its Windows operating system, which is used in 90% of computers around the world. That would enable competitors to develop their own versions of the software.
In its defense, Microsoft will suggest that with the growth of the Internet, the company's future market dominance is uncertain and has already rendered the government's complaints obsolete.
Last Thursday, Microsoft released its latest offering, Windows 2000, designed for the large server computers used by networks and Internet sites. The company is hoping to secure a larger stake in the growing world of electronic commerce.
The release was overshadowed by statements attributed to Bill Gates later that night by Bloomberg TV, that the software giant was prepared to release the source code for Windows in order to settle the lawsuit.
Inconsistent with that report, Microsoft immediately released a statement saying, "The only thing he commented about the mediation was that we are doing our best to settle this case," said Jim Cullinan, Microsoft spokesman, adding that the discussion with Gates had been confidential.
In July 1994, Microsoft signed a consent decree with the U.S. Justice Department designed to increase competition in the software industry. Two years later, the department charged Microsoft had violated that decree, and despite a successful appeal by Microsoft, the case has moved ahead as one of the biggest anti-trust cases this decade. The outcome of this anti-trust case is sure to have a huge effect on the software industry
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