Microsoft asks court to dismiss antitrust lawsuit

As expected, Microsoft has asked a US Federal Court to dismiss an antitrust lawsuit against it, arguing that its alleged anticompetitive activity -- browser-OS integration and controversial partner contracts -- has not impeded its primary browser rival, Netscape. But the judge has already indicated he believes the lawsuit has merit and should be heard.

As expected, Microsoft has asked a US Federal Court to dismiss an antitrust lawsuit against it, arguing that its alleged anticompetitive activity -- browser-operating system integration and controversial partner contracts -- has not impeded its primary browser rival, Netscape Communications .

However, US District Court Judge Thomas Penfield Jackson indicated last week that he believes the lawsuit has merit and should be heard. Microsoft said today in a statement that it hopes the judge will at least expedite the case by dismissing some key claims. Trial is scheduled to start Sept. 8 in the Washington, D.C. court.

In its 88-page motion for summary judgment, Microsoft said the government's case was flawed because of numerous factual errors underlying its argument. Microsoft repeatedly cited an Appeals Court decision -- involving a separate but similar lawsuit -- that it said undermined the government's claim that Microsoft is illegally "tying" its operating system and browser. That court had overturned an injunction preventing Microsoft from forcing computer makers to install Internet Explorer on their Windows 95 systems.

In that decision the Appeals Court ruled that the two technologies are not separate, but integrated, and that integrating them is not anti-competitive if the integrated technologies benefit customers. That ruling, Microsoft said today, refutes most of the claims made by the US Department of Justice (DOJ) and the 20 state attorneys general in the lawsuit filed in June.

In addition, neither Microsoft's integration of its browser with its operating system nor its contracts with third-parties has "foreclosed Netscape from distributing its Web browsing software to consumers in vast quantities," Microsoft said. Netscape itself has proven this by acknowledging publicly that it has gained 70 million users of its software in less than four years since initially releasing its browser, and that it plans to distribute more than 100 million copies of its browser this year, according to Microsoft.

As for Microsoft's contracts with Internet service providers, online service providers and content providers that the DOJ said prevented or discouraged the partners from doing business with Microsoft rivals, Microsoft said they never required exclusive distribution of Internet Explorer and didn't interfere with Netscape's business. Although Microsoft said the contracts were completely legal, the company said it waived the provisions criticised by the DOJ earlier this year, "so the issue is effectively moot."

"The competitive harm of tying is that such arrangements 'deny competitors free access to the market for the tied product' and, at the same time, force consumers to 'forego their free choice between competing products,'" Microsoft's motion said, citing prior case law. "Plaintiffs cannot establish that Microsoft has done anything to deny Netscape access to OEMs (original equipment manufacturers) as a channel of distribution or that Microsoft has denied users their free choice among Web browsing software. These facts are also fatal to plaintiffs’ tying claims."

The software giant also filed today a 33-page response to the governments' motion for a preliminary injunction. The response mentions the same arguments as the motion for summary judgment but focuses mostly on denials of lesser government claims, including the accusation that Microsoft first tried to get Netscape to agree to divide the browser market before waging a war on Netscape.

Microsoft also argues that it does not have "monopoly power" in a properly defined market, so it can not justifiably be accused of monopolistic practices. Microsoft said case law defines monopoly power as "the power to control market prices or exclude competition."

The government has defined the market as desktop PCs running on Intel processors, but Microsoft said the relevant market actually is broader, encompassing minicomputers, workstations and a variety of desktop computers, which run operating systems that compete with Windows. Merely having a high current share of sales of operating system software doesn't give Microsoft the power to control market prices or exclude competition, Microsoft argued.

In addition, the government has failed to prove that Microsoft has attempted to engage in predatory competition or to monopolise the market, the company said in its motion for summary judgment.

The DOJ did not immediately return phone calls seeking comment.

Microsoft, in Redmond, Washington, can be reached at http://www.microsoft.com/. The U.S. Department of Justice, in Washington, D.C., can be reached on the Web at http://www.usdoj.gov/.

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