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Date: Wed, 07 Jun 2000 16:37:41 -0400
To: politech@vorlon.mit.edu
From: Declan McCullagh <declan@well.com>
Subject: FC: Judge Jackson slams Microsoft: Break 'em up!
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________________________________________
)
)
UNITED STATES OF AMERICA, )
)
Plaintiff, )
)
v. ) Civil Action No. 98-1232 (TPJ)
)
MICROSOFT CORPORATION, )
)
Defendant. )
)
_________________________________________________________________
)
)
STATE OF NEW YORK, et al., )
)
Plaintiffs, )
)
v. )
)
MICROSOFT CORPORATION, )
)
Defendant. )
)
_________________________________________________________________
) Civil Action No. 98-1233 (TPJ)
)
MICROSOFT CORPORATION, )
)
Counterclaim-Plaintiff, )
)
v. )
)
ELIOT SPITZER, attorney )
general of the State of )
New York, in his official )
capacity, et al., )
)
Counterclaim-Defendants. )
)
_________________________________________________________________
MEMORANDUM AND ORDER
These cases are before the Court for disposition of the sole matter
presently remaining for decision by the trial court, namely, entry of
appropriate relief for the violations of the Sherman Act, §§ 1 and 2,
and various state laws committed by the defendant Microsoft
Corporation as found by Court in accordance with its Findings of Fact
and Conclusions of Law. Final judgment will be entered
contemporaneously herewith. No further proceedings will be required.
The Court has been presented by plaintiffs with a proposed form of
final judgment that would mandate both conduct modification and
structural reorganization by the defendant when fully implemented.
Microsoft has responded with a motion for summary rejection of
structural reorganization and a request for months of additional time
to oppose the relief sought in all other respects. Microsoft claims,
in effect, to have been surprised by the "draconian" and
"unprecedented" remedy the plaintiffs recommend. What it proposes is
yet another round of discovery, to be followed by a second trial - in
essence an ex post and de facto bifurcation of the case already
considered and rejected by the Court.
Microsoft's profession of surprise is not credible.(1)
From the inception of this case Microsoft knew, from well-established
Supreme Court precedents dating from the beginning of the last
century, that a mandated divestiture was a possibility, if not a
probability, in the event of an adverse result at trial. At the
conclusion of the trial the Court's Findings of Fact gave clear
warning to Microsoft that the result would likely be adverse, yet the
Court delayed entry of its Conclusions of Law for five months, and
enlisted the services of a distinguished mediator, to assist Microsoft
and the plaintiffs in reaching agreement on a remedy of some
description that Microsoft knew was inevitable. Even assuming that
Microsoft negotiated in utmost good faith in the course of mediation,
it had to have in contemplation the prospect that, were mediation to
fail, the prevailing plaintiffs would propose to the Court a remedy
most to their liking and least likely to be acceptable to Microsoft.
Its failure to anticipate and to prepare to meet such an eventuality
gives no reason to afford it an opportunity to do so now.
These cases have been before the Court, and have occupied much of its
attention, for the past two years, not counting the antecedent
proceedings. Following a full trial Microsoft has been found guilty of
antitrust violations, notwithstanding its protests to this day that it
has committed none. The Court is convinced for several reasons that a
final - and appealable - judgment should be entered quickly. It has
also reluctantly come to the conclusion, for the same reasons, that a
structural remedy has become imperative: Microsoft as it is presently
organized and led is unwilling to accept the notion that it broke the
law or accede to an order amending its conduct.
First, despite the Court's Findings of Fact and Conclusions of Law,
Microsoft does not yet concede that any of its business practices
violated the Sherman Act. Microsoft officials have recently been
quoted publicly to the effect that the company has "done nothing
wrong" and that it will be vindicated on appeal. The Court is well
aware that there is a substantial body of public opinion, some of it
rational, that holds to a similar view. It is time to put that
assertion to the test. If true, then an appellate tribunal should be
given early opportunity to confirm it as promptly as possible, and to
abort any remedial measures before they have become irreversible as a
practical matter.
Second, there is credible evidence in the record to suggest that
Microsoft, convinced of its innocence, continues to do business as it
has in the past, and may yet do to other markets what it has already
done in the PC operating system and browser markets. Microsoft has
shown no disposition to voluntarily alter its business protocol in any
significant respect. Indeed, it has announced its intention to appeal
even the imposition of the modest conduct remedies it has itself
proposed as an alternative to the non-structural remedies sought by
the plaintiffs.
Third, Microsoft has proved untrustworthy in the past. In earlier
proceedings in which a preliminary injunction was entered, Microsoft's
purported compliance with that injunction while it was on appeal was
illusory and its explanation disingenuous. If it responds in similar
fashion to an injunctive remedy in this case, the earlier the need for
enforcement measures becomes apparent the more effective they are
likely to be.
Finally, the Court believes that extended proceedings on the form a
remedy should take are unlikely to give any significantly greater
assurance that it will be able to identify what might be generally
regarded as an optimum remedy. As has been the case with regard to
Microsoft's culpability, opinion as to an appropriate remedy is
sharply divided. There is little chance that those divergent opinions
will be reconciled by anything short of actual experience. The
declarations (and the "offers of proof") from numerous potential
witnesses now before the Court provide some insight as to how its
various provisions might operate, but for the most part they are
merely the predictions of purportedly knowledgeable people as to
effects which may or may not ensue if the proposed final judgment is
entered. In its experience the Court has found testimonial predictions
of future events generally less reliable even than testimony as to
historical fact, and cross-examination to be of little use in
enhancing or detracting from their accuracy.
In addition to its substantive objections, the proposed final judgment
is also criticized by Microsoft as being vague and ambiguous.
Plaintiffs respond that, to the extent it may be lacking in detail, it
is purposely so to allow Microsoft itself to propose such detail as
will be least disruptive of its business, failing which plaintiffs
will ask the Court to supply it as the need appears.
Plaintiffs won the case, and for that reason alone have some
entitlement to a remedy of their choice. Moreover, plaintiffs'
proposed final judgment is the collective work product of senior
antitrust law enforcement officials of the United States Department of
Justice and the Attorneys General of 19 states, in conjunction with
multiple consultants.(2)
These officials are by reason of office obliged and expected to
consider - and to act in - the public interest; Microsoft is not. The
proposed final judgment is represented to the Court as incorporating
provisions employed successfully in the past, and it appears to the
Court to address all the principal objectives of relief in such cases,
namely, to terminate the unlawful conduct, to prevent its repetition
in the future, and to revive competition in the relevant markets.
Microsoft's alternative decree is plainly inadequate in all three
respects.
The final judgment proposed by plaintiffs is perhaps more radical than
might have resulted had mediation been successful and terminated in a
consent decree. It is less so than that advocated by four
disinterested amici curiae. It is designed, moreover, to take force in
stages, so that the effects can be gauged while the appeal progresses
and before it has been fully implemented. And, of course, the Court
will retain jurisdiction following appeal, and can modify the judgment
as necessary in accordance with instructions from an appellate court
or to accommodate conditions changed with the passage of time.
It is, therefore, this _____ day of June, 2000,
ORDERED, that the motion of defendant Microsoft Corporation for
summary rejection of the plaintiffs' proposed structural
reorganization is denied; and it is
FURTHER ORDERED, that defendant Microsoft Corporation's "position" as
to future proceedings on the issue of remedy is rejected; and it is
FURTHER ORDERED, that plaintiffs' proposed final judgment, as revised
in accordance with the proceedings of May 24, 2000 and Microsoft's
comments thereon, be entered as a Final Judgment herein.
______________________
Thomas Penfield Jackson
U.S. District Judge
1. Despite their surprise, compounded no doubt by the Court's refusal
on May 24th to allow discovery and take testimony on the issue,
Microsoft's attorneys were promptly able to tender a 35-page "Offer of
Proof," summarizing in detail the testimony 16 witnesses would give to
explain why plaintiffs' proposed remedy, in its entirety, is a bad
idea. Within a week they added seven more.
2. Two states dissented from the imposition of structural remedies but
fully supported the remainder of the relief proposed. The absence of
total unanimity merely confirms the collaborative character of the
process by which the proposed final judgment was formulated.
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