Has Microsoft thrown in the towel?

With a ticked-off judge on its hands, Microsoft has seemingly conceded this round of its antitrust battle with the US Department of Justice and is looking to win an appeal with a much friendlier bench, analysts say. During two days in court last week, District Judge Thomas Penfield Jackson appeared to be losing patience with Microsoft for not complying with his December 11 order to offer its Internet Explorer browser and Windows 95 as two clearly separate products. Observers say Microsoft has antagonised Jackson and the government at every turn and that the company now be pinning its hopes on what may be a friendlier bench at the next hearing in April.

With a ticked-off judge on its hands, Microsoft has seemingly conceded this round of its antitrust battle with the US Department of Justice and is looking to win an appeal with a much friendlier bench, analysts say.

During two days in court last week, District Judge Thomas Penfield Jackson appeared to be losing patience with Microsoft for not complying with his December 11 order to offer its Internet Explorer browser and Windows 95 as two clearly separate products.

That preliminary injunction arose from the government's charge that Microsoft has violated a 1995 consent decree by forcing computer-makers to install the browser as a condition of licensing Windows 95.

"It seemed absolutely clear to you that I entered an order that required that you distribute a product that would not work. That's what you're telling me?" Jackson asked Microsoft vice president David Cole.

"In plain English, yes ... we followed that order. It wasn't my place to consider the consequences of that," Cole replied.

Observers say Microsoft has antagonised Jackson and the government at every turn.

"[Jackson] is showing all the signs of a man who is ready to side with the government on this one," says William Kovacic, an antitrust law professor at George Mason School of Law in Arlington, Virginia. "His response to Microsoft's arguments reveals a real irritation with Microsoft's advocates and their position."

"It appears that Microsoft is acting as if they've already lost the case," added Simon Lazarus, an antitrust attorney at Powell, Goldstein, Frazer & Murphy, in Washington. "They seem to have given up on Judge Jackson, so they have no compunction about alienating him."

The three judges who will hear the Microsoft appeal scheduled for April -- A. Raymond Randolph, Laurence H. Silberman, and Stephen F. Williams -- are known for their conservative, antiregulatory stances.

"When the Justice Department saw that list [of judges] I think their reaction was, `this is not the best of all worlds,'" Kovacic said. "When Microsoft saw that list, they thought, `this is the first bit of light we've seen.'"

Jan. 22 is the date set for final arguments in the hearing to determine whether Microsoft is in contempt of Jackson's order to cease compelling OEMs to bundle its Internet Explorer browser with Windows 95.

Microsoft Corp., in Redmond, Washington, can be reached at http://www.microsoft.com/.

(Ted Smalley Bowen contributed to this report.)

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