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Breakup it is – judge signs off DoJ MS proposal

Now for that fishing trip...

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MS on Trial Where were you when you heard about the Final Judgement on Microsoft? Yes, it was one of those moments in history.

Judge Jackson had two choices: either he could accept the DoJ proposal in its entirety, or modify it. By doing the former, he avoided the need for producing a lengthy memorandum to explain his actions, and confined himself to making a few choice remarks mainly directed at Microsoft's current behaviour - which he takes a pretty dim view of. He let the proposal stand because the "Plaintiffs won the case, and for that reason alone have some entitlement to a remedy of their choice".

It had become near-certain, at least publicly, that his judgement was imminent during the teleconference on 1 June when he particularly asked for the DoJ's final brief to be filed on Monday morning, and Microsoft's response by Wednesday morning. Perhaps Microsoft knew he really was in a hurry to rule, so it filed earlier than necessary in order not to be antagonistic. In any event, Microsoft was caught unawares by the filing yesterday, since it had been saying it expected it Thursday or Friday.

Execs hit the runways

Bill Gates was in Washington with a busy lobbying programme, and Steve Ballmer was in Oslo, having just come from Vienna where he discussed Internet crime - although this amusing coincidence probably did not strike him, or the Austrian Minister of the Interior.

Despite the encouraged image of Bill Gates sitting at the back of a scheduled trans-Atlantic flight working with his laptop, or asleep across several seats, the reality is that Air Microsoft jets him and his bodyguards around, for perfectly understandable security and efficiency reasons. So on Tuesday evening, when presumably he had been tipped off about the filing of the Final Judgement, he cancelled his Washington appointments for Wednesday and got back to Fort Redmond pronto to prepare for meltdown.

The judge's total endorsement of the DoJ/Plaintiff States proposal makes any substantive appeal in his court highly improbable, although the possibility of Microsoft asking him to stay the breakup until the result of its appeal is known would be likely to be heard sympathetically. This could also be a much quicker procedure for Microsoft.

In his Memorandum, Judge Jackson is critical of "Microsoft's claims, in effect, to have been surprised by the draconian' and unprecedented' remedy the plaintiffs recommend" and makes it quite clear that "yet another round of discovery, to be followed by a second trial" had already been "considered and rejected by the Court". But that wasn't all: "Microsoft's profession of surprise is not credible" since it would have known from Supreme Court precedents that this was "a possibility, if not a probability" - and "the Court's Findings of Fact gave clear warning to Microsoft that the result would likely be adverse".

The judge makes a telling point (for an appellate court) that his Court "delayed entry of its Conclusions of Law for five months, and enlisted the services of a distinguished mediator" (who was of course a senior judge from the Court of Appeals), in the hope of a remedy more acceptable to Microsoft might be agreed through a consent decree.

Continuing 'innocent' claims irk judge

It clearly irks the judge that "Microsoft has been found guilty of antitrust violations, notwithstanding its protests to this day that it has committed none", so the entry of the final, appealable judgement was essential since "Microsoft as it is presently organized and led is unwilling to accept the notion that it broke the law or accede to an order amending its conduct." He then goes on to make four points that he doesn't like about Microsoft's behaviour, starting with Microsoft's refusal to concede that any of its business practices violated the Sherman Act, and claiming that the company has "done nothing wrong" and would be vindicated on appeal."

Nor does he like Microsoft's scorn for any conduct remedies, and carrying on business-as-usual to the extent of trying to sabotage new markets (a reference to the recently-revealed Gates' emails of course). The judge also bluntly says that: "Microsoft has proved untrustworthy in the past" and harks back to its failure to comply with his earlier preliminary injunction while it was on appeal. His last point is that it is unlikely that opinions about remedies could be resolved by further hearings, and as for the "offers of proof", he had found from experience that future predictions were less reliable than "even the testimony as to historical fact".

Judge Jackson has added a stinging footnote about Microsoft's alleged surprise that it would be heard no more in his court: "Despite their surprise, compounded no doubt by the Court's refusal on May 24th to allow discovery and take testimony on the issue, Microsoft's attorneys were promptly able to tender a 35-page "Offer of Proof," summarizing in detail the testimony 16 witnesses would give to explain why plaintiffs' proposed remedy, in its entirety, is a bad idea. Within a week they added seven more." [It's actually six more, because Schmalensee is down twice.]

The judge expresses satisfaction that the judgement "is the collective work product of senior antitrust law enforcement officials of the United States Department of Justice and the Attorneys General of 19 states, in conjunction with multiple consultants". This is of course another gentle message to an appellate court not to mess with it. The result is that the objectives of relief are achieved: "to terminate the unlawful conduct, to prevent its repetition in the future, and to revive competition in the relevant markets".

Lest parting be sweet sorrow, Judge Jackson concludes by noting that his "Court will retain jurisdiction following appeal, and can modify the judgment as necessary in accordance with instructions from an appellate court or to accommodate conditions changed with the passage of time". He then denied Microsoft's outstanding motions, rejected Microsoft's "position" brief, and entered the Plaintiffs' Proposed Final Judgement as his Final Judgement, without any changes. ®

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