Microsoft Says No to Further Concessions
In a defiant end to the biggest antitrust case in a century, Microsoft Corp. lawyers Wednesday ignored a federal judge’s request that they submit a list of possible concessions to the nine states suing the company for antitrust violations, saying the proposed settlement with the Justice Department is as far as the software giant is willing to go.
Legal experts viewed the request as an indication that U.S. District Judge Colleen Kollar-Kotelly, who seemed to side with Microsoft during much of the trial, was pressuring the company to reconsider its penalty proposals. But during closing arguments, Microsoft lead lawyer John Warden refused to make any concessions.
“This proposed decree is fundamentally flawed ... punitive and draconian,” Warden said of the states’ penalties. “We can’t remedy any of this by changing a few words here and there.” Later in the day, Warden--who also ignored Kollar-Kotelly’s request that Microsoft and the states consider how the proposed settlement might be improved--sarcastically offered to eliminate some extra penalties that Microsoft agreed to during negotiations that led to a settlement accord with the Justice Department in November.
For their part, the states said their top priority was to force Microsoft to share more of its computer software code with rival developers so that competitors could make their product work better with Windows.
On Tuesday, Kollar-Kotelly ordered both sides to “prioritize the various provisions in your own remedy proposal” rather than argue about the differences in their proposed antitrust penalties.
The states, which during the trial repeatedly pressed Microsoft to produce a “modular” version of Windows in which key software such as Web browsers could be replaced with products produced by rivals, de-emphasized that proposal during oral argument Wednesday.
The states also did not mention a previous proposal to require that Microsoft offer uniform pricing to computer makers. That provision went unmentioned even though state trial lawyer Steven Kuney noted that rewarding allies with price discounts and threatening rivals were “part of the fabric of how they [Microsoft] do business.”
Kuney went on to describe Microsoft as an illegal monopolist. And he described company Chairman Bill Gates as arrogant, saying Microsoft executives appear to think “they know better than anyone else what’s best for this PC ecosystem.”
Warden took issue with the characterizations: “We haven’t failed to get [the] message. We haven’t claimed that we’re immune from the law or anything of that kind.”
Kollar-Kotelly, who formally took the antitrust case under advisement Wednesday evening after more than six hours of oral argument, must decide whether to adopt all or part of the states’ tough remedies against Microsoft for breaking antitrust law. She also must weigh whether a less onerous federal settlement Microsoft reached with the Justice Department is in the public interest.
Kollar-Kotelly is expected to issue a final ruling this summer.
Four years after the landmark case began, some experts believe the outcome probably will not be as earth-shattering as when the case first began and a breakup of Microsoft was on the table.
“The possibility of really shaking up the industry has seriously diminished,” said Andrew Gavil, an antitrust expert and professor of law at Howard University in Washington. Kollar-Kotelly’s decision, he predicted, “will be magnitudes below a breakup ... although it will still have significant consequences” for the technology industry.
A federal appeals court last year found that Microsoft, whose flagship Windows software runs more than 90% of all personal computers, used its software dominance to illegally muscle out competitors. But the District of Columbia, California and eight other states broke ranks with the federal government and pursued stronger antitrust sanctions against Microsoft.
The holdout states told Kollar-Kotelly on Wednesday that the Justice Department’s settlement with Microsoft lacked teeth. They alleged that Microsoft has yet to alter its anti-competitive business practices, and that the current court case might be the government’s last opportunity to restore competition in the market for computer operating systems.
“I suggest to you that Microsoft still doesn’t get it, and you’re the only one left to tell them what it’s all about,” said the states’ lead trial attorney, Brendan V. Sullivan.
Some experts said Wednesday that an outpouring of public and expert sentiment against the Microsoft settlement with the Justice Department appears to have swayed Kollar-Kotelly at the eleventh hour.
Of the 30,000 public comments submitted to the court this spring in connection with the antitrust case, 7,500 supported Microsoft. And this month, a bipartisan group of six leading former government economists filed a brief urging Kollar-Kotelly to impose tough penalties on Microsoft.
“I think the judge was persuaded by the economists,” said Rob Enderle, a senior technology analyst for Giga Information Group in Santa Clara. “Her decision is not going to be a rubber stamp of the [Microsoft-Justice Department] settlement agreement,” Enderle said. “She is looking for a remedy that goes further.”
Two years ago, the original jurist in the antitrust case, U.S. District Judge Thomas Penfield Jackson, ordered Microsoft broken up into two. A federal appeals court upheld many of the violations but overturned Jackson’s breakup order and appointed Kollar-Kotelly to determine a new punishment.
