Judge calls Microsoft monopoly

Federal court issues preliminary decision in antitrust lawsuit

Power stifles competition

Firm's actions called unfailingly greedy, harmful to consumers

November 06, 1999|By Lyle Denniston | Lyle Denniston,SUN NATIONAL STAFF

WASHINGTON -- In a devastating blow to Microsoft Corp., a federal judge declared yesterday that the company has a monopolistic grip on the entire computer and Internet industry and has used that domination to harm consumers.

And, U.S. District Judge Thomas Penfield Jackson concluded, at every turn over the past half-decade, Microsoft has exploited its "prodigious power" over what computers and computer-users can do to serve a single goal: the most selfish interests of Microsoft.

In not one of his 412 conclusions over 207 pages did Jackson speak favorably or approvingly of Microsoft's conduct. For every business gesture he recounted, the judge suggested a business motive that was at least questionable, and at worst highly destructive of competition.

After hearing 76 days of testimony in the government's historic antitrust lawsuit against the computer industry giant, Jackson drew his factual conclusions about what he said Microsoft has done.

A second phase of the lawsuit -- with the judge drawing conclusions about whether Microsoft actually broke the law -- will come sometime next year.

Attorney General Janet Reno pronounced it "a great day for American consumers." The judge, she said, had fully supported the Justice Department view "that this case is about the protection of innovation, competition and the consumer's right to choose the products they want."

Bill Gates, Microsoft's chairman and chief executive, asserted that Jackson's findings "do not reflect the phenomenal competition and innovation in the software industry." Gates vowed to continue fighting to protect "the freedom to innovate on behalf of our consumers."

The company's business rivals are portrayed by the judge as nearly helpless victims.

Jackson also found that Microsoft has abused its own customers -- legions of customers, ordinary or influential, individual or corporate, small or large -- and has actually made their computers work less efficiently or creatively than they otherwise would.

"The ultimate result" of what he found, Jackson said, "is that some innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft's self interest."

Not user-friendly

Computers running on Microsoft's digital systems -- and that means most computers these days -- simply are not very user-friendly, the judge concluded. Computers could have been more easily usable, he found, if Microsoft had not worked so aggressively to kill off innovations by its rivals.

By pushing its Internet Explorer Web browser, and by making it next to impossible to take that system out of a computer, the judge said, Microsoft made computers more sluggish and harder for consumers to use.

The judge's factual judgments amounted to a major victory for the Justice Department's Antitrust Division and its energetic chief, Joel Klein.

The report yesterday reads strikingly like an expanded version of the claims made by Klein and his staff when they prepared their antitrust lawsuit and filed it in May of last year. Klein declared the department "enormously pleased."

From here on, Jackson will be weighing what the Sherman Act of 1890 -- the old trust-busting law that is the nation's most powerful and most flexible antitrust instrument -- requires him to do about Microsoft, if anything.

But the long litany of negative findings yesterday appeared to leave the judge with no option but to conclude the case eventually with some finding of illegality.

The factual judgments Jackson has made will stir a rousing new courthouse war between Microsoft and Justice Department lawyers over the issue of whether the company actually has violated the Sherman Act, and what to do about that if it has.

Using language that was mostly moderate, but describing findings that might prove to be devastating for the company's legal fortunes, Jackson seemed to have pushed himself a long way toward not only finding violations of the Sherman Act but also toward imposing drastic antitrust remedies as a result.

The most that he could do would be to break up Microsoft -- the way a federal judge did with the Bell System's telephone monopoly 15 years ago.

Short of that, the judge might be tempted to restructure Microsoft from end to end, to try to create a completely new competitive environment in developing computer software -- the digital systems that make computers run.

New corporate culture

At a minimum, he appeared to have set himself the task of creating a new corporate culture inside Microsoft.

Among the most critical of yesterday's findings was the judge's brusque rejection of Microsoft's claim that it has driven hard bargains with its competitors solely to produce more and faster innovation in computer software, and to protect the high quality of its own creations -- especially its almost universally used "Windows" system as the nerve center of personal computers.

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