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DoJ trial summary damns MS with facts

The DoJ's 800 pages contrast sharply with the MS version

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MS on Trial The most remarkable thing about the 800-page Plaintiffs' Joint Proposed Findings of Fact (PJPFF) is that is very much better than was anticipated. The PJPFF is the summary of the Microsoft trial so far according to the Department of Justice, so it is effectively a mirror image of Microsoft's version, analysed here last week. There had been concern that the consumer interest - the key issue in antitrust cases - had not been sufficiently emphasised by the DoJ during the examination of witnesses, but with the facts gathered together, there are 150 pages addressing this very topic. The difference between the PJPFF and Microsoft's Proposed Findings of Fact (MPFF) is very great. The PJPFF is a well-developed document in every respect, from its excellent tables of contents to the way in which the evidence is presented. The logic contrasts sharply with the Microsoft's labyrinthine rhetoric: both are likely to find an important place in the classics of legal literature, albeit for different reasons. Judging from what the professional team at the DoJ's San Francisco office has produced, had former DoJ antitrust chief Ann Bingaman left the first antitrust case to the Antitrust Division's professional staff instead of interfering, we might today have a competitive marketplace for operating systems. Bingaman played a politician's role in hoping to get a quick fix and an associated reputation, but failed because she was out-negotiated by Microsoft, and wound up with the faulty Consent Decree, which Microsoft was able to drive a legal coach and four through. The PJPFF comes in the form of structured statements, which are introduced by a heading and elaborated with concise extracts from the trial documents. There is no fat, no extraneous argument, and none of the new evidence that characterised the Microsoft document. Because of the logical approach, it is far easier and more pleasant to read this document than Microsoft's. It will be difficult for Microsoft to make any significant impact on the document when it files its comments next month. The person who comes out of the DoJ story worst is Microsoft economic witness Dean Richard Schmalensee. The DoJ says his analysis is "deeply flawed... based on suppositions that are contrary to both the evidence and common sense and contradict his prior writings and testimony". For the Caldera case, Schmalensee defined a market for Intel-compatible desktop operating systems, but claimed in his evidence to the DoJ case that assessing market share is "not helpful in an industry like software" because the industry is too "dynamic" to apply traditional methods of antitrust analysis. The DoJ uses Schmalensee's indiscretions many times to show that his evidence was inconsistent and therefore unreliable, even finding eight examples where Schmalensee's assertions about there being no applications barrier were contradicted by his evidence. Schmalensee should perhaps consider whether his testimony is consistent with maintaining an academic position, and MIT should give careful thought as to whether its reputation can survive its economist guns-for-hire. There are some frustrating gaps where evidence is still under seal, although Judge Jackson has said he will be considering whether to release more of the evidence. The DoJ is rather gentle about alleged future competitive threats that Microsoft seeks to use by way of explanation of its behaviour. The PJPFF patiently deals with these attempted excuses by Microsoft, although it could have dismissed them with the argument that the case is properly about alleged illegal past actions. Even Microsoft was unable to find responses by Bill Gates to questions that could provide some degree of mitigation for its conduct. Nor has the DoJ found much of Gates' 20 hours of deposition useful to its case, since his basic approach was not to answer questions. The failure of Microsoft's chairman to lead from the front with a best-foot-forward defence will almost certainly be seen to be Microsoft's biggest mistake. Certainly Judge Jackson has commented both verbally and with body language about this. It was very important for the DoJ's case that legal criteria for proof are met, and the PJPFF appears to satisfy this requirement in abundance. It would appear that Microsoft has been out-lawyered by the DoJ, not on quantity but on some mixture of determination and quality. The DoJ names 13 lawyers (with Phillip Malone of the DoJ San Francisco-based Antitrust Bureau as trial attorney, David Boies as special trial counsel, and Jeffrey Blattner as special counsel for information technology), plus an unknown but probably minor amount of support from lawyers from the plaintiff states. For Microsoft, Sullivan & Cromwell acknowledges nine lawyers on the case, with Microsoft naming five in-house lawyers. There is however deep cause for concern as to whether any remedial measures that the District Court might impose would be in force during an appeal, or whether the Court of Appeals (or the Supreme Court) would order such measures to be held in abeyance while an appeal is considered. The facts of this case would appear to make the outcome less of a political issue about the principles of antitrust law (which is not favoured by the mostly Republican-appointed appellate judges), and more one of dealing with Microsoft's pattern of behaviour. On balance, it is therefore unlikely that an appellate court would put all remedies into abeyance, although if a structural remedy such as divestiture or the creation of Baby Softs were the principal remedy imposed, this would create an immediate problem. It is therefore more likely that non-structural remedies would be imposed. However, reasons for Microsoft to seek a consent decree at the very last moment are becoming more compelling. ® Other Sections Part II - monopoly power Part III - Browser Battles Complete Register Trial coverage

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