Microsoft Found Guilty as Charged

Moving another step closer to a remedy in the antitrust case against Microsoft Corp., U.S. District Judge Thomas Penfield Jackson today stated that the software giant is guilty of maintaining its monopoly through predatory and anti-competitive means.

The ruling comes just forty-eight hours after talks between Microsoft and the Department of Justice fell apart.

In his Conclusions of Law, Judge Jackson stated that Microsoft violated the Sherman Antitrust Act by abusing its monopoly over the operating system market.

"Over the past several years, Microsoft has comported itself in a way that could only be consistent with rational behavior for a profit-maximizing firm if the firm knew that it possessed monopoly power, and if it was motivated by a desire to preserve the barrier to entry protecting that power," according to the report.

In particular, the Conclusions of Law stated that Microsoft illegally gained browser market share by tying it to Windows, and acted to deter Netscape Navigator from being bundled with PCs.

The report also stated that Microsoft acted to prevent Sun Microsystems Inc.'s ( Java from being used in the market.

In the report, Judge Jackson expressed that Microsoft's actions should be viewed holistically.

"Only when the separate categories of conduct are viewed, as they should be, as a single, well-coordinated course of action does the full extent of the violence that Microsoft has done to the competitive process reveal itself," Jackson wrote in the report.

The Conclusions of Law issued today follow tightly the Findings of Fact issued by Judge Jackson last fall.

The one place it varied was in that the Conclusions of Law stated that Microsoft did not violate antitrust laws with its marketing agreements with PC makers.

"Today's ruling was not unexpected," said Microsoft Chairman Bill Gates in a press conference on Microsoft's Redmond campus. "But there are several steps ahead in this case."

Gates maintained that his company still wants to resolve the case. Government officials have also expressed a willingness to reopen the talks. Reports have speculated, however, that a settlement at this point is unlikely -- particularly for the government to agree to anything less than a breakup after the harsh Conclusions of Law.

Microsoft's senior vice president of law and corporate affairs, Bill Neukom, indicated in the press conference that Microsoft plans to appeal on the basis of the procedure imposed upon Microsoft, questions of law, and findings that Microsoft believes are inadmissible for not passing hearsay requirements.

"It will be a broad reaching appeal by Microsoft," he said.

Neukom also said he expects the remedies phase of the case to take a few months. Beyond that an initial ruling may take up to a year.

Looking forward, Gates said that Microsoft doesn't see its future in the products it already has. Instead, the company sees its real value emerging through future innovations, such as Next Generations Windows Services, a platform the company plans to detail this spring.

Company president Steve Ballmer remained as positive as possible.

"Until the appeal is over, nothing is settled," he said.

Based on the finding of fact that Microsoft indeed has a monopoly and illegally used said monopoly, a flurry of private suits are expected to be filed immediately. - Thomas Sullivan

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.


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