Dragging its heels could help company

It should fare better on appeal and if GOP wins presidency

Analysis

April 04, 2000|By Michael Stroh | Michael Stroh,SUN STAFF

Why did Microsoft decided to roll the dice and let the court decide its fate instead of settling its case with the government?

The answer might have as much to do with legal strategy as it does with the psyche of company founder Bill Gates, analysts said yesterday.

Given the harshly worded indictment of the company's business practices issued last fall by Judge Thomas Penfield Jackson, yesterday's decision against the huge Redmond, Wash.-based software company was practically a foregone conclusion.

Microsoft, experts said, had nothing to lose -- and possibly everything to gain -- by moving its battle with the government to the U.S. Circuit Court of Appeals for the District of Columbia, and even the Supreme Court, where many legal scholars believe the case will wind up.

"Ultimately, this is hardball, and hardball requires strategic thinking," said Jonathan Zittrain, executive director of the Berkman Center for Internet & Society at the Harvard Law School.

Zittrain said Microsoft has time to settle the case, has time to settle the case, because Jackson isn't expected to decide until summer what's to be done with the company.

The benefits to Microsoft of heel-dragging -- through summer and beyond -- are many, observers said.

A new administration -- especially if it is Republican -- might decide the antitrust battle against the company is pointless and drop it. The rise of new technologies -- such as the increasingly popular Linux operating system -- might undercut the charge that Microsoft is a monopolist.

But experts said the most compelling reason to press on in the courts is that Microsoft couldn't do worse than it did in Jackson's courtroom, and there is evidence to suggest it would do much better in someone else's.

"They've made Judge Jackson so angry with all their shenanigans. They probably figure, `Let's just start over,' " said Bob Lande, an authority on antitrust law with the University of Baltimore who has followed the case.

"The worst-case scenario is whatever they would have ended up conceding to the government today they will concede in two years. And they could get lucky," he said.

Public statements by Microsoft officials in the past few days seem to indicate that this is what the company is thinking.

After settlement talks with the Justice Department and 19 state attorneys general broke down over the weekend, Gates told the New York Times: "We absolutely believe that the judicial system will ultimately rule in our favor."

Microsoft general counsel William Neukom told reporters: "We'd rather be in the appeals court."

The last time the government and Microsoft were in an appellate court, Microsoft came out on top. That was in June 1998, when the government accused Microsoft of breaking an agreement that it wouldn't tie its Web browser, Internet Explorer, to its operating system, Windows 95.

In his opinion, U.S. Circuit Judge Stephen F. Williams said the courts aren't qualified to judge software design and that Microsoft could bundle the products if it wanted to.

That finding, experts say, might not bode well for the government, because one of its contentions in its latest battle with the company is that Microsoft illegally tied Internet Explorer with its latest consumer operating system, Windows 98.

There might be more to the company's decision to fight on than a favorable appeals court. Some say the "founder factor" -- the urge to rescue what you created -- could come into play.

That might have motivated Gates to do anything to prevent the company he built from being broken up, as some state attorneys general are suggesting.

"It's still his baby," said James Wallace, a Seattle journalist who wrote "Overdrive: Bill Gates and the Race to Control Cyberspace."

"And, like any father, he's going to be there fighting for his child."

Wallace recalled that in 1994, during the company's first round with government antitrust regulators, it was Gates who stayed at the negotiating table until the wee hours to craft a settlement.

When the government sued Microsoft three years later, alleging it had broken the agreement and took the company to court, the earlier experience may have helped fuel the company's distrust of regulators.

Marc Schildkraut, a Washington attorney who worked for the Federal Trade Commission when it began investigating Micrsoft's business practices, said Gates was adamant from the beginning about keeping the government from meddling in his company's software development.

"I remember one time he specifically said, `I don't want Marc Schildkraut running our company,' " said Schildkraut.

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