MS/DOJ: Points deducted for lack of charm

Government lawyers arguing the landmark antitrust trial against Microsoft have built their case on allegations that the country's most successful software company brazenly employs aggressive, arrogant and heavy-handed tactics in its dealings with fellow software companies. The depiction is familiar, and even admired by many in the personal computer industry, but people following the trial say the playground bully image isn't doing the company any favors in US District Court, where the case brought by the Department of Justice and 20 US states is being heard.

Government lawyers arguing the landmark antitrust trial against Microsoft have built their case on allegations that the country's most successful software company brazenly employs aggressive, arrogant and heavy-handed tactics in its dealings with fellow software companies.

The depiction is familiar, and even admired by many in the personal computer industry, but people following the trial say the playground bully image isn't doing the company any favors in US District Court, where the case brought by the Department of Justice and 20 US states is being heard.

“Microsoft forgets about this word 'hubris' all the time, until they are forced to remember,” said David Lawrence, host of Online Tonight, a nightly syndicated talk radio show that focuses on high-tech topics.

“I went into the trial with strong opinion and remain with strong opinion that there are absolutely no grounds for the case,” Lawrence said. “But it seems that they have gone out of their way to irritate the judge and I can't, for the life of me, understand that.”

Lawrence cited Microsoft's cross examination in the third week of the trial of Apple Computer enior executive Avadis Tevanian, which angered Judge Thomas Penfield Jackson to the point of criticizing Microsoft counsel for “mischaracterising” what the witness said.

The video-taped testimony of Microsoft Chief Executive Officer and Chairman Bill Gates, on which the prosecution has relied several times to show contradictions and patterns of behavior, has also “left a definite smell of smoke” in the courtroom, Lawrence said. Particularly poignant was Gates’ taped denial that Microsoft officials focused their efforts in the Internet browser war primarily on Netscape Communications. That statement made Jackson laugh and shake his head.

Jeffrey Eisenach, president of the Progress & Freedom Foundation, a Washington-based conservative think tank that receives funding from many large software companies, said Gates is coming off as disingenuous and the positions the Microsoft attorneys have taken are indefensible.

“Going back even before the trial, Microsoft has handled this issue as badly as I've seen anyone handle a major issue in Washington, D.C.,” Eisenach said. “The Microsoft strategy has been accuse the accuser, deny the obvious, delay, delay, delay and then complain about the delays.”

But there's much more to the trial than perceptions. Eisenach said that as the government begins calling economic witnesses who will support the argument that Microsoft's behavior has hurt free enterprise, the challenge will be to demonstrate that there has been significant harm.

Damage to consumers is more difficult to show in this case than in a case involving a homogeneous product whose price has been raised above the competitive level.

“Any first-year economic student can measure the cost of that to the consumer,” Eisenach said. “The case here goes more to products that weren't offered, innovation that did not occur and innovation that might not occur in the future. It's like proving murder without a body, but that has been done.”

The judge will have to conclude, based on the government's arguments, that people are worse off because they didn't have a chance to use versions of Netscape Communicator that were never made, he said.

Jonathan Zuck, executive director of the Association for Competitive Technology, said he hasn't heard any credible arguments yet on consumers being harmed.

“The government doesn't even spend that much time talking about consumers … and that's who the antitrust laws are supposed to protect, not competitors,” said Zuck, whose Washington-based advocacy group represents more than 150 computer industry companies.

Zuck said the argument that consumer choices have been limited has been “systematically dismantled” by Microsoft defense lawyers and he said there is no barrier to the market for any company that wants in.

“The government has made assertions that seem to make the cover of the business sections and when subject to the scrutiny of the court they are at best diminished and in most cases they have been wholly disproved,” Zuck said.

Beyond harm to consumers, another hurdle the government must cross involves the key question of monopoly market power and that could be dramatically different than the bad-acts phase of the government's case, said Carey Heckman, director of the Law and Technology Policy Center at Stanford University.

“The testimony will focus on economist theories about how the software marketplace operates rather than the more sensational e-mails and video testimony,” Heckman said.

So far there has been much media coverage and sympathy for the government's case, which is a crucial first step, Heckman said, but it's not enough to prove an antitrust violation.

“The government's more difficult work remains," Heckman said. "First, it must demonstrate Microsoft possesses monopoly market power. Absent monopoly market power, Microsoft's aggressive, heavy-handed, and bullying actions may be no more than hard-nosed All-American competition.”

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