What went wrong with the DOJ's case?

When Microsoft antitrust trial Judge Thomas Penfield Jackson began publicly sharing his opinion about this historic case, he did more damage to the government's position than Microsoft managed to do throughout the 78-day trial.

That was very clear from last week's U.S. Court of Appeals hearing on Microsoft's appeal of Jackson's ruling. The appellate judges were aghast at Jackson's breach of judicial discretion for making such statements as comparing Microsoft executives to gang members convicted of murder, as charged in a brief by Microsoft. The public, said Appeals Court Judge David Tatel, may well "wonder whether this judge is biased against the defendant."

"Jackson's conduct has so clouded this whole proceeding that the judges are just doubtful about the whole works," said Herb Hovenkamp, an antitrust expert and law professor at the University of Iowa.

The deference the Appeals Court might have otherwise given to Jackson's findings of facts, which support nearly every claim made by the U.S. Department of Justice (DOJ) and 19 states, is gone, said Hillard Sterling, an antitrust expert at Gordon & Glickson P.C. in Chicago.

"Judge Jackson's breakup order is doomed. There's no chance that the breakup order will survive this appeal," said Sterling.

Despite last week's hearing, supporters of the case maintain that it will be impossible for the court to reject all of Jackson's work. If the Appeals Court upholds the key monopoly maintenance charge -- that Microsoft used anticompetitive tactics to maintain its monopoly in desktop operating systems -- the government still has a case.

"What is safe to say is a finding of monopoly maintenance would support a very significant, substantial remedy, which could include breakup or conduct remedies," said Stephen D. Houck, former lead trial counsel for the 19 states and now an attorney at Reboul, MacMurray, Hewitt, Maynard & Kristol in New York.

But Houck and others say the Bush administration may move to settle the case once the Appeals Court acts. The new nominee to head the DOJ's antitrust division, antitrust attorney Charles James, has spoken out publicly against breaking up Microsoft, said Hovenkamp.

However, a settlement in the Microsoft case may pose problems for the Bush administration.

In 1982, the government ended its 13-year antitrust case against IBM after the Reagan administration concluded the case was "without merit." IBM's market position was eroding by that time, so there wasn't the backlash against the administration that there might have been had IBM become even more dominant later.

The risk for the Bush administration if it were to settle the Microsoft case is that the company could well be just as dominant when re-election rolls around as it is now, said Hovenkamp. "If Microsoft's position is just as strong four years from now -- and there is a lot of blood on the floor from applications competitors -- then [such a] settlement is going to come back and bite the Bush administration," he said.

This story, "What went wrong with the DOJ's case?" was originally published by Computerworld.

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