Peter Kaplan
WASHINGTON: An appeals court questioned on Tuesday a government plan to split
Microsoft Corp. and raised doubts about the credibility of the trial judge who
ruled that the company had violated antitrust laws.
For the second consecutive day, the appeals judges bombarded government
attorneys with questions about whether the violations warranted breakup, whether
dividing Microsoft would truly promote competition, and why there had been no
full hearing on the split.
Several judges on the seven-member panel raised the possibility of throwing
out one or two of the three major findings against Microsoft and upholding only
the charge that the company illegally maintained its monopoly in personal
computer operating systems.
That could mean sending the case back to the district court level to
reevaluate the remedy part of the trial, said Judge David Sentelle. "Don't
we have to re-litigate remedy if we strike down any of your case?" Sentelle
asked Justice Department counsel David Frederick.
violates the whole code of office. The system would be a sham if all judges went
around doing this," he said.
The critical comments comes close in the heels of a book published after the
trial ended by a journalist who has claimed to have interviewed Jackson twice
during the trial. In those interviews, the judge reportedly compared Microsoft
executives' to a street gang and criticized the appeals judges for overturning
one of his earlier rulings.
Microsoft has argued that the out-of-court comments show Jackson was biased
and asked the appeals court to void all of his rulings. The US Department of
Justice and 19 states contend the statements shouldn't affect the trial because
they were published after Jackson ruled on the case.
This prompted Judges Sentelle and Stephen Williams to ponder aloud on whether
they should show deference to Jackson's findings of fact, given his remarks.
Meanwhile, stock of Microsoft fell 3/16 to $59-3/8 at the close of the Nasdaq
market Tuesday in a down day for tech stocks generally. The stock had gained
Monday, partly on the start of the appeals case, analysts said.
Chances of breakup slim
On June 7, Jackson had ordered the breakup of the company to prevent future
antitrust violations, and set other remedies, all of which he suspended pending
appeal.
Jackson had found Microsoft holding monopoly in the market for personal
computer operating systems with its Windows product and illegally using the
advantage, including integrating its Web browser into Windows and refusing to
offer them separately.
Legal analysts say the appeals judges are unlikely to void all Jackson's
rulings and start the trial over again. But Jackson's remarks could make it
easier for them to strike down the break-up remedy and many of Jackson's other
rulings. "He doesn't get the benefit of the doubt, and Microsoft's are
elevated in importance," said George Washington University law professor
William Kovacic, who attended the hearings.
Edwards raised other discrepancies in Jackson's ruling during Tuesday's
arguments. He said the trial court was 'absolutely unclear' in reaching findings
that Microsoft had acted illegally in trying to monopolize the market for Web
browsers. "There are these sleights of hand about whether we're talking
about a browser market or whether we're talking about the platform market. You
can't have it both ways," said Edwards.
The government charges Microsoft of having offered Netscape a deal in 1995 to
divide the browser market. But the argument that the step was taken by Microsoft
with the view of gaining a monopoly over the browser market, according to Judge
Tatel said, was "awfully speculative."
Microsoft has consistently denied having proposed to divide the browser
market at a June 1995 meeting with Netscape Communications Corp., now owned by
AOL Time Warner. Richard Urowsky, arguing for Microsoft, said any attempt to
manipulate the browser market would have failed, as there were so many other
browsers available to consumers at that time.
There had also been signals Monday that the appeals court was skeptical of
Jackson's ruling. The appeals judges had reserved the toughest questions for the
government's lawyers, quizzing them on whether destroying Microsoft's monopoly
might simply result in another firm's dominating the market. "I don't think
we're going to see a breakup," Kovacic said.
Chief judge Edwards also criticized some of Jackson's other findings as
unfounded. Even before the arguments began, legal analysts believed the US Court
of Appeals, which ruled for Microsoft in a related matter in 1998, represents
Microsoft's best chance to overturn or substantially weaken Jackson's ruling.
There has been speculation that weakening of the case by the appeals court
could lead to imminent settlement talks between Microsoft and the new
administration of President George W Bush. The landmark antitrust case, filed in
May 1998, is the biggest since the government took AT&T Corp. to court,
resulting in the 1984 breakup of the company into regional telephone companies.
(C) Reuters Limited 2001.