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Too little, too late? MS sets out its stall for the judge

Leaks pave the way for the counter-offer

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MS on Trial Microsoft is leaking the main thrust of its response to the DoJ proposed final judgment, the Washington Post suggested yesterday. It will apparently have three parts: first, a rebuttal of what the DoJ proposed; second, some mild chastisement suggestions; and third, some procedural proposals to Judge Jackson so that Microsoft can drag out the case for as long as possible - with the probable objective of trying to delay the Final Order until a new and more malleable US President is installed. Microsoft would do this by asking for discovery about the basis for the DoJ's filings, and seeking depositions and hearings to examine the DoJ's evidence, but it is far from certain that this would be granted. It depends how confident Judge Jackson feels that his Final Order would not be overturned on the ground of not letting Microsoft present enough argument. The DoJ would no doubt say that the Declarations are just supporting documents that bear on the adequacy of the DoJ's proposal, and not further documents that incriminate Microsoft - although they do of course. Gates' smoking-gun email could be seen in the context of offering a reason why conduct remedies would never be sufficient, since Microsoft would not abide by them. More time needed, says Neukom Bill Neukom, Microsoft's head in-house lawyer has been suggesting that a $400 billion company needs more than 12 days to respond to the DoJ's proposal (he wants a "significant expansion of the remedy process"). It is unlikely that Microsoft can persist with its denials of having done anything wrong in its filing on 10 May, as this would invite the wrath of the court; it would be contemptuous if not suicidal. It hardly matters what innocuous conduct remedies Microsoft suggests against itself, since it would appear to be most unlikely that any significant argument would prevail. The DoJ will no doubt urge, to Judge Jackson's probable approval, that he should ignore Microsoft's delaying tactics so that the case could go quickly to the Supreme Court. Although theoretically the Supreme Court could decline a reference under the Expediting Act, this is very unlikely in view of the economic effects of the case on the stock market. After all, the justices are political appointees, and some are shareholders too. Judge Silberman of the Court of Appeals did finally admitted he controlled a fund that held Microsoft stock so had to recuse himself from an earlier phase of the case in February 1998. He has never clarified whether he held Microsoft stock on the occasions when he ruled against Judge Sporkin in 1995, or subsequently when he ruled for Microsoft. It has been rumoured that Microsoft would be willing to offer a version of Windows with IE access suppressed rather than removed, but this is likely to laughed out of court because it does not address the issue of taking up users' disk real estate, let alone keeping the bugs in fine breeding form. It's also rumoured that Microsoft would be willing to allow OEMs to have flexibility over the first screen, which of course hardly matters to Microsoft since it has effectively eliminated the competition. Microsoft is also said to be willing to show no favouritism to OEMs. Less to API offer than meets eye? The fourth supposed concession - that Microsoft would make available "parts of the Windows system code used by independent software companies to design their software applications to run on Windows" requires parsing. It would seem that the access may well be just to APIs (of which very many are deliberately undocumented), and not to parts of the source code. Whether this would be done completely and in a timely fashion is doubtful, based on Microsoft's previous record in these matters. It sounds like a potential rerun of the undocumented MS-DOS and Windows 3.x calls sagas. There is also no reason to suppose that there would not be additional restraints on this, including an NDA; a fee (as a minimum, probably membership of MSDN); and provisions to make it essentially impossible for such licensees to be involved with the Wine or other Windows-bypass projects. It is of course an admission that Windows does not after all have an open interface. The concessions, if made, would not appear to add anything to those leaked during Judge Posner's mediation attempt, and the Washington Post story yesterday suggests that the proposals will add up to less than what was on offer. If Microsoft feels very bold, it might say that it has done more good than bad, and that it would formally undertake not to act "illegally" in the future, without actually admitting it had acted illegally in the past, as has been found judicially. Microsoft would of course also try to convince the court that there are conduct remedies to address the findings of illegal behaviour, and that a drastic breakup is not needed. It is known that Microsoft's defence will include a filing by Wilmer, Cutler and Pickering of Washington - concentrating on the alleged iniquity of a breakup and probably trying to find some legal substance for a significant delay. It just happens that Boyden Gray, a White House counsel to Presidents Reagan and Bush, works for this firm and has offered the view that George W Bush would drop the case if he won. Gray, speaking at a New York University conference on Friday at which the DoJ's chief trial lawyer David Boies was scheduled to appear but cancelled without any explanation, claimed that he thinks the case will be settled, but after the November presidential election. At one point in his presentation, Gray suggested that a duel might be the best solution - but it would more likely be a bare-knuckle fight than a gentlemen's duel. Nicholas Economides, a NYU economist, suggested at the conference that Microsoft would settle, "and end up with legal fees and triple damages of .$6 billion or so'". In fact, Economides is misinformed, as this is not a possible legal outcome of the present case since Microsoft would have had to have been offered a jury trial if a claim for damages exceeded $20: no monetary damages were claimed by either the DoJ or the Plaintiff States. Douglas Melamed of the DoJ noted that remedies are supposed to be forward-looking. Rick Rule, who is retained by Microsoft, admitted that Microsoft was in the difficult position of having to produce remedies for offences it claims it did not commit. Rule thought it probable that the case would go first to the Court of Appeals, and that it was unlikely that the Supreme Court would hear the case on an expedited track. Rule also claimed that Microsoft wasn't looking to a White House change but to the courts: "It doesn't need political intervention to win," he claimed. Stanley Liebowitz of the University of Texas also supported Microsoft again (the breakup plan was "boneheaded", he claimed) and it would not be surprising if he supported Microsoft's filing on Wednesday. Judge Jackson played an amusing trick on Microsoft when he invited the company to suggest how it would propose dealing with its sins at the same time as the company wanted to protest its innocence. It will be very interesting to see if he grants Microsoft any time extension before the hearing scheduled for 24 May.

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