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MS mounts futile bid to delay, blunt trial penalties

Weird scenes inside the documentation...

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Analysis Microsoft's last two documents prior Judge Jackson's Final Judgement are strange in format and puzzling in intention. The company sticks to its guns without any rational hope of victory at this juncture - so it hopes to fight again later.

The Comments on Plaintiff's Revised Proposed Final Judgement is, as the title suggests, primarily a detailed commentary on the DoJ's document, with an introduction that makes three points. Although the preamble says that "It remains Microsoft's firm belief, however, that the relief requested by the government is extreme and unjustified", and the third point is that the comments are "without prejudice to its positions on the merits and as to the relief that should be awarded", Microsoft has stuck uncompromisingly to its earlier filings and failed to make any conciliatory suggestions.

The first point is that "The government's proposed final judgment is defective in numerous respects, making the document vague and ambiguous", and that the DoJ had failed to address some "legitimate questions of interpretation" that the DoJ conceded Microsoft had raised. Rather than substantiating this claim, Microsoft bizarrely goes on to cite case law about the form of any injunction. In the second point - that "Microsoft has not engaged responsibly on the issue of process" - Microsoft claims that it understood that the 24 May hearing "wasto be the beginning - not the end - of proceedings on the issue of relief", and that "there was no occasion to take depositions between April 28, 2000 and May 24, 2000, given that discovery was closed long ago by the Court".

This is a cheeky misunderstanding, and Microsoft's failure to confirm this view with the Court shows either legal incompetence or a decision by Microsoft to brazen it out and hope an appellate court might swallow this untenable explanation.

We were ambushed, honest

The Supplemental Offer of Proof that Microsoft also filed follows the Federal Rules of Evidence requirement that to preserve a claim of error relating to the exclusion of evidence, an offer of proof must be made. Microsoft claims that it had "secreted" nothing in the famous brief case, and that it just brought out an already-signed work-in-progress document "for use solely in the event the Court determined, as the government urged, to terminate the remedies phase of the trial without affording Microsoft discovery or an evidentiary hearing". With this statement Microsoft blows itsdefence that it relied on the hearing being "the beginning - not the end - of proceedings on the issue of relief". It's unlikely that this contradiction will be missed by the judge.

Microsoft's detailed comments on the DoJ's proposed Final Judgement are given in the form of a working draft, with text to be removed crossed through and alternative text underlined. This is clear enough, but it should all have been done on the first DoJ Proposed Final Judgement, and not the revised one. Microsoft makes a number of perfectly valid drafting comments, but does very little to advance its case. Indeed, the whole tenor is that the document is a whinge, rather than a serious defence. There are just enough drafting points to make it difficult for Judge Jackson to issue any judgement this week, if he decided to take the DoJ's document as his basis. His law clerk would have to check everything that Microsoft has raised, since the DoJ would not be allowed to have another go at its proposal.

Of course, the judge could issue a simply-worded judgement that was sufficient to provide the appellate court with a clear picture of his intentions, without all the detail. Judge Jackson was leaning this way during the hearing - to hold off from producing a comprehensive judgement now - but he was advised by both sides that a Final Judgement was needed for the appellate court. It was for this reason that we suggested he would need more time to prepare his judgement, and almost certainly a weighty memorandum setting out his legal reasoning.

The foreigners might not like it

Some of Microsoft's drafting comments are quite amusing. For example, it understandably doesn't like the DoJ's euphemistic description of the breakup as a "reorganisation", and plumps for "divestiture". Microsoft produces many claims as to why everything would take longer than the DoJ wants, and at one point claims that "foreign governments" may need to approve the divestiture - and of course (don't laugh), Microsoft doesn't want to be "forced to violate any laws in any jurisdiction".

There are quite a few places where Microsoft seeks to delay the breakup and imposition of conduct remedies, but the supporting arguments look like less-than-sincere excuses from the accused. There can be no doubt that Microsoft does really understand what the DoJ wants to happen, as is seen in some of its quite sharp comments. In places, Microsoft has also brought up some reasonable points in a way that is even sensible - pointing out where terms are not adequately defined for example.

Microsoft also scores points for noting out that the Plaintiff States are not authorised to bring enforcement actions under the Sherman Act, so that States may not take part in compliance inspections. And so far as compliance is concerned, Microsoft does not want the DoJ snooping at anything being done outside scope of the Final Judgement. That's interesting: could it be that Microsoft didn't want any examination of its baroque accounting practices?

Exclude CE and Win2k.. please?
There are also some rather outrageous claims - for example, that "Microsoft designed Windows 95 and Windows 98 so that non-Microsoft Web browsing software like Netscape Navigator could be made the 'default browser'". Microsoft is also distinctly edgy about disclosing what it calls "internal interfaces", despite one programmer's internal interface being another programmer's short-cut. It does not wash that at this late stage that Microsoft is trying to define the market - having refused to do so during the trial - to exclude servers and hand-held devices. It wants the definitions changed to exclude Windows CE and 2000 Server, and their successors. In case Judge Jackson had in mind that Microsoft should not be allowed to do mergers and acquisitions (something that was left out of the DoJ's proposal), Microsoft has added a paragraph specifically allowing it to do them.

We were surprised that Microsoft did not refer to its decision to postpone the NGWS love-fest, either in its legal documentation or in the accompanying PR release. Was it an oversight not to use the "innovation-is-being-affected" argument - or is there some more cunning plan?

Late substitute witnesses

In its filings, Microsoft puts more stress on its Supplemental Offer of Proof than its Comments document. Our old friend Dean Richard Schmalensee has a second appearance (he was in the original Offer, and also popped up twice in Court). Microsoft claims there are "seven more" witnesses, but there are only six unless the good Dean is again being put up for a double act.

The most interesting new face is Michael Capellas, Compaq's CEO. He's willing to say that breaking Microsoft would "make it more difficult for OEMs to provide customers with the tightly integrated product offerings they demand [sic]". His offer to appear must result from Microsoft's expressed desire to give Compaq better OEM terms - if Microsoft gets any say in the matter. Apart from yet another economist (there can't be many left), the remainder of the proposed witnesses are the top bods of DreamWorks, JD Edwards, GEICO and Nordstrom. Microsoft clearly chose the wrong witnesses during the trial, and its attempt to re-run it is most unlikely to get anywhere. It's stuff that Microsoft hopes might get some sympathy with an appellate court, but it will surely get the cold shoulder from the District Court. ®

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