US case against Microsoft questioned by court

Peter Kaplan

WASHINGTON: An appeals court on Monday raised doubts about the US

government's case against software giant Microsoft Corp. and criticized the

trial judge who ordered the break-up of the company.

In the first of two days of oral arguments before the US Court of Appeals,

the seven-judge panel interrogated lawyers from both sides, but reserved most of

its skepticism for the government. The judges, seated beneath four marble

statues in the cavernous ceremonial courtroom, questioned the underlying logic

of the case against Microsoft, saying the destruction of its monopoly may just

lead to another firm dominating the market.

"You're going to replace one monopoly with another if you're

right," appeals court chief judge Harry Edwards told government lawyers.

Edwards also took the unusual step of complaining about some of the

fact-findings of the trial judge in the case, US district court judge Thomas

Penfield Jackson.

Jackson's findings branded Microsoft an abusive monopolist and led to his

break-up order against the company. But Edwards said in court that some of them

did not appear to be supported by evidence presented during the trial.

"When I find facts, and there's no citation, I don't think my obligation

as an appeals court judge is to defer to them," Edwards said. "It's

got to be supported by something other than the statement of the District

Court."

Analysts said the court hearing helped push Microsoft stock up 5 per cent for

the day, more than double the gain posted by the overall Nasdaq Composite Index.

Treatment of Netscape



The appeals court, which may take several months to rule, spent nearly three
hours hearing arguments over whether Microsoft illegally maintained its monopoly

in personal computer operating systems by crushing a rival Web-browser made by

Netscape.

Microsoft, the world's largest software company, has already said in written

filings that its behavior was lawful, the lower court judge was biased and the

breakup remedy radical and inappropriate. But the US department of justice and

19 states argue that the findings of District Court Judge Thomas Penfield

Jackson should stand, citing evidence presented during 78 days of trial.

Legal experts present in the court said they had expected the government to

come under fire from conservative judges on the panel but the attack by Edwards

was significant. During the morning session, the judges' questions "did

much more damage to the government than they did to Microsoft," said a law

professor at the University of Baltimore, Robert Lande, who attended the

session.

Continued...

Attorney Richard Urowsky, opening for Microsoft, told the seven-judge panel

that the entire case was undermined by the widespread availability of Netscape's

browser which the lower court found Microsoft had tried to eliminate as a

competitive threat. "Nothing Microsoft did foreclosed Netscape from any

portion of the marketplace," Urowsky said.

Microsoft took some pointed questions on the logic of its own arguments on

Netscape. On the one hand it has argued that Netscape was a competitor but on

the other it has also said it presented no threat as an alternative platform or

"middleware" to the Windows operating system.

At one point, Edwards challenged Urowsky to come up with a good reason why

the company refused to let computer manufacturers remove its Internet Explorer

browser. The practice, he said, "certainly looks predatory."

Government case criticized



Department of Justice attorney Jeffrey Minear, meanwhile, had to contend
with an even bigger barrage of questions from Edwards and Judges Stephen

Williams, Raymond Randolph and Douglas Ginsburg about whether the market

naturally tended toward a single, dominant standard.

Minear said the government case was "all about allowing the competitive

process to determine who will be the winner in the market." But the chief

judge pressed Minear on whether the winner would be a monopoly. "You don't

seriously assume that you have competing middleware operations, do you?"

asked Edwards.

"I can't say that it's inconceivable that a situation could arise where

there would be..." Minear answered before Edwards cut him short with:

"You haven't argued that."

The judges also asked Minear how Microsoft's attack on Netscape could have

been aimed at maintaining its monopoly when Netscape's own chief executive

testified that his company never intended to compete with Windows.

Had Netscape really been shut off from the marketplace, they asked,

government attorney John Roberts, when documents said consumers had downloaded

millions of the company's browsers over the Internet?

During the afternoon, the arguments moved on to the government's claim that

Microsoft illegally tied its Internet Explorer browser into Windows 98 in order

to destroy Netscape. Urowsky stuck to Microsoft's long-held argument that

integrating the browser into Windows benefited consumers by allowing the

software to work seamlessly together.

"It may give benefits, but the question is why force people to take

it," Roberts responded.

Edwards and Williams expressed doubts about the government's argument again.

They questioned Jackson's finding that Microsoft had actually harmed consumers

by refusing to let computer makers remove Internet Explorer.

In particular, Edwards asked Roberts for evidence to support Jackson's

contention that some consumers wanted to buy copies of Windows without any

browser.

Legal analysts later said that it's not surprising that the government came

under tougher scrutiny. Like an army that has conquered a lot of territory,

"It's got a lot of ground to defend," said William Kovacic, a

professor of antitrust law at George Washington University.

Kovacic said the government attorneys will have to try to come up with

answers for some of the questions tomorrow or risk losing large pieces of its

case.

If the ruling is substantially pared back by the appeal judges, analysts say

that might lead antitrust enforcers in the new Bush administration to seek a

settlement.

On Tuesday, lawyers will debate the government's charge that Microsoft used

its dominant position to attempt to monopolize the Internet browser market, and

whether the court should uphold Jackson's decision to split the company in two.

Finally, the judges will hear arguments over Microsoft's assertion that

Jackson was biased against the company and conducted the lower-court trial

unfairly.

(C) Reuters Limited 2001.