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Friends of MS flounder in court brief

Confused filing keeps missing the point

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MS on Trial The first surprise in the Association for Competitive Technology's amicus brief supporting Microsoft against the DoJ and the States is that the ACT appears to be claiming 9,000 company members. A very careful reading shows that it counts the corporate members of other industry associations that have joined ACT, which is rather presumptious since it assumes that each of these members supports the ACT when they may not be aware that they are numbered amongst Microsoft supporters. The second big surprise is that although the brief is intended to support Microsoft's proposed conclusions of law, it attempts a reinterpretation of some key facts and takes an independent legal line that is not exactly parallel with that of Microsoft. The defence claim that copyright gives Microsoft the right to act as it does gets no airing, with the ACT brief only casually mentioning copyright in two unrelated contexts: once in a reference to the Sun v Microsoft case; and the other in a novel and questionable suggestion in footnote 45 that "As a copyright holder, Microsoft was free not to license Windows 95 to an OEM [IBM] that was in arrears on its royalty payments under past licences and, unlike other OEMs, was favouring its own software over Microsoft's". In fact of course Microsoft could have taken action against IBM under the terms of its licences with IBM, and copyright was not an issue. As to the favouritism, it has no relevance at all. We labour the point, because this is the essence of the brief: it is tangential, and many questionable assertions ignore the evidence presented in court. The ACT brief prefers the argument that IE attained its market share because "AOL - Microsoft's competitor in Internet access and the owner of Netscape - found Internet Explorer's technology superior to Navigator's" and that "Microsoft gained a competitive position in the browser market by competing aggressively on quality and price." Apart from this being a new theory - and it is too late to present either new evidence or new interpretations of "facts" when the issue is to consider the legal aspects - the volte face towards AOL seems to be related to the AOL merger with Time Warner, and Microsoft's more relaxed view of the competition that AOL will offer. Judge Jackson found that: "Microsoft entered a contract with AOL whereby Microsoft actually paid AOL a bounty for every subscriber that it converted to access software that included Internet Explorer instead of Navigator." He also noted that: "Microsoft executives thus realised that if they could convince AOL to distribute Internet Explorer with its client software instead of Navigator, Microsoft would - in a single coup - capture a large part of the IAP channel for Internet Explorer. In the early spring of 1996, therefore, Microsoft exchanged favourable placement on the Windows desktop, as well as other valuable consideration, for AOL's commitment to distribute and promote Internet Explorer to the near exclusion of Navigator. AOL's acceptance of this arrangement has caused an enormous surge in Internet Explorer's usage share and a concomitant decline in Navigator's share." Although the brief says that "For the purposes of the brief, ACT assumes the Court's Findings of Fact to be correct" it then proceeds to make statements that do not correlate with the letter or spirit of Judge Jackson's Findings of Fact, starting with the suggestion that Microsoft's monopoly was "lawfully acquired" - which is nowhere suggested by Judge Jackson. The ACT brief makes the unfounded assertion that AOL found IE superior, but the truth is that Microsoft made the financial and promotional terms sufficiently attractive for AOL to opt for IE, although Navigator was preferred technically. The brief also claims that the renewal of the contract in January 1999 showed that IE was preferred, but again the truth is that it was not until September 1998 that Netscape delivered to AOL a beta version of a componentised browser (codenamed Raptor, and also Gecko), with the expectation - possibly optimistic - that a gold master could be ready by 1 December 1998. This was probably just too risky for AOL, hence the renewal of the IE agreement. Judge Jackson found that: "Microsoft entered a contract with AOL whereby Microsoft actually paid AOL a bounty for every subscriber that it converted to access software that included Internet Explorer instead of Navigator." The ACT brief also attempts to argue that it was competitors who were harmed, and not consumers, but again Judge Jackson found otherwise: (para 173) "Microsoft's actions have inflicted collateral harm on consumers who have no interest in using a Web browser at all. If these consumers want the non-browsing features available only in Windows 98, they must content themselves with an operating system that runs more slowly... More generally, Microsoft has forced Windows 98 users uninterested in browsing to carry software that, while providing them with no benefits, brings with it all the costs associated with carrying additional software on a system." He continued: (para 174) "Microsoft has harmed even those consumers who desire to use Internet Explorer, and no other browser, with Windows 98." Time after time, the brief tries to re-argue factual matters, when a judicial finding has already been made that negates the arguments that are rehearsed again. Nor is there any consideration of any earlier situation, but the judge was certainly critical of Microsoft's behaviour: (para 175) "No technical reason can explain Microsoft's refusal to license Windows 95 without Internet Explorer 1.0 and 2.0." In its legal arguments, ACT is understandably in advocacy mode, but suggestions like "If a dominant supplier acts consistent [sic] with a competitive market - out of fear perhaps that potential competitors are ready and able to step in - the purpose of the antitrust laws is amply served." ACT seems to be suggesting that no holds are barred if Microsoft thinks there are competitors out there. After all, the antitrust laws are designed to maintain competition. The brief points out that the conduct challenged must be "objectively anticompetitive" and "actually monopolise or dangerously threaten to do so". Judge Jackson found, as a matter of fact, that (para33) "Microsoft enjoys monopoly power". Consequently arguments that the DoJ and the States have not established monopolisation claims and attempted monopolisation claims, but that Microsoft is just a "lawful monopoly" are not in accordance with the facts - and in any event, are too late. ®

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