February 26, 2001 11:25 AM PST

Judges grill U.S. lawyer in Microsoft antitrust appeal

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Jackson ruling unfair?
Barry Reingold, antitrust attorney, Perkins Coie
WASHINGTON--During a hearing Monday that could determine Microsoft's ultimate fate, an appellate court judge questioned whether the U.S. government has gone too far in trying to restrict the software company.

Seven judges from the U.S. Court of Appeals for the District of Columbia grilled Microsoft lead attorney Richard Urowsky and Assistant Solicitor General Jeffrey Minear over whether Microsoft used illegal means to maintain its alleged monopoly in PC operating systems.

Microsoft is trying to overturn a ruling from last year that said the company violated U.S. antitrust law. As a result, the judge ordered Microsoft be broken up into two separate companies.

Although the burden rests on Microsoft to get the lower court ruling overturned, much of the focus this morning was on the government's goal to restrain the software giant's business practices. Judges raised the question of whether the suggested penalties could force Microsoft to behave differently than some of its competitors, such as Sun Microsystems.

"What level of competition is permissible?" asked Judge Stephen Williams.

The court pointed out that Sun Microsystems has been actively and successfully recruiting developers for Java, a programming language and technology that could potentially undermine Microsoft's dominance in desktop software.

The court also took issue with some of Microsoft's positions, extensively questioning Microsoft's Urowsky. He argued that it would have been too difficult to remove Internet Explorer from the Windows operating system. This bundling question was one of the main points of contention during the antitrust trial.

Battle lines are already appearing on the seven-judge panel, but it remains difficult to predict how the court will rule, said William Kovacic, a George Washington University law professor.

"You can definitely see agendas on the panel," Kovacic said. Judging by the line of questioning, three of the judges appear to be favoring Microsoft, while two others are straddling the fence, he said. The opinion of the other two is difficult to detect at the moment.

Still, "it's too early to tell what the questioning means," Kovacic added.

In perhaps the most pivotal exchange of the morning, Chief Judge Harry Edwards attacked the basic premise of the government's case.

Edwards questioned whether the former Netscape Communications, which offered a competing browser product to Microsoft's IE, truly posed a competitive threat to Microsoft.

He asserted that while Microsoft perceived Netscape as a competitive threat, the browser maker lacked the "interest in or capacity to serve as a middleware platform." Middleware is software that sits between the applications and the hardware. Microsoft controls its development in PCs.

In its case, the government had argued that Netscape's browser and Sun's Java programming language could have conceivably replaced Windows.

Edwards said he could see that Java had such a potential. But he couldn't find in the court record where Netscape saw Navigator as a competitor to Windows. In fact, Edwards said, former Netscape CEO James Barksdale testified that his company was not "in the middleware business."

"There's no doubt that Microsoft had a large vision," said Edwards, who added that there is also no evidence Netscape "shared the same interest" for a middleware strategy.

Minear argued that Microsoft used anti-competitive tactics and other means to choke Netscape's "air supply."

But Edwards was not convinced that this was a relevant point. He asked Minear that if Microsoft used its monopoly power to put a grocery-store chain out of business, whether that violated antitrust law.

The judges also vigorously questioned Minear about what constituted pro-competitive vs. anti-competitive behavior. For example, one issue before the court is to determine how competitive tactics used by Microsoft differed from those used by Sun, and why such behavior constituted an antitrust violation.

Minear argued that Sun had struggled to get programmers to write software for Java and that Microsoft's tactics encouraged developers to write for Internet Explorer instead.

This failed to satisfy Judge Stephen Williams. "You're still very vague on what methods are permissible" for competition, he said.

When Minear referred to memos that indicated Microsoft wanted to crush Navigator and Java, Edwards rebuffed him.

Edwards asserted that, of course, Microsoft wanted to compete aggressively as any company would. Edwards' greater concern was that the government's scenario goes too far and would mean "one monopoly replacing another." Sun, for example, could become a beneficiary because it would make it easier for them to woo developers for Java.

During the opening session, Urowsky defended Microsoft's contention that copyright law gave the company the right to prohibit PC makers from changing the start-up screen.

The judges also caught Urowsky using different parts of the record to make contradictory arguments.

Urowsky argued that Microsoft was not truly a monopoly. He included the Mac operating system, Java and Netscape as competitors. He later argued that Microsoft did not maintain its monopoly against Netscape because it was a nascent threat.

"Isn't your position contradictory?" Judge Raymond Randolph asked.

Edwards also queried Urowsky about why the company couldn't make it easier to remove Internet Explorer from Windows. Urowsky started to describe the method as technically complicated.

"I'm not buying that for a minute," Edwards said. "It's not technically complicated at all."

 

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