DoJ rebuts MS brief, lobbies for Supreme Court hearing

In a very readable 30-page brief to the Supreme Court, the DoJ yesterday set out its reasons for the Microsoft case to be heard directly, and not by the court of appeals. The DoJ's brief, in response to Microsoft's brief three weeks ago.

Microsoft meanwhile has been trying hard to get Judge Jackson's findings of fact set aside, but unless the Supremes take the view that they were "clearly erroneous" - as the federal rules of civil procedure require - Microsoft is whistling into the wind on this one. Microsoft had made the argument that the findings were not always cross-referenced to the documentation of the case, but the DoJ points out that there is no requirement to do this and that it is for Microsoft's counsel to show where the findings differed from the evidence.

The summary in the first 12 pages outlines just two areas where Microsoft abused its position: in tying IE to Windows, and in sabotaging Java. It notes that Microsoft spent more than $100 million each year between 1995 and 1999 to fund 1,000 programmers working on Internet Explorer in order to stop Navigator from becoming "the standard" browser that developers would use as the focus for development, rather than Windows.

Microsoft's anticompetitive actions were examined in detail during the trial, and included constricting Netscape's access to efficient distribution channels. The evidence could hardly be stronger, since contracts were produced to the court in which Microsoft required OEMs to take IE. Microsoft also included restrictions that had the effect of increasing the cost of promoting Navigator; giving incentives for exclusively promoting IE; and penalising OEMs that pre-installed Navigator.

I can't get it off...
In addition, Microsoft decided to bundle IE with Windows and to remove the "add/delete" capability that had previously allowed users to remove IE when pre-loaded with Windows 95. One of the most memorable admissions by a Microsoft witness during the trial was when the hapless Jim Allchin wrote to Paul Maritz that "we are not investing sufficiently in finding ways to tie IE and Windows together". The outcome was the delaying of Windows 98 until IE could be bound with it, "even if OEMs suffered".

Microsoft also allowed no deviation from the Windows boot sequence and threatened to terminate the Windows licence of any OEM that dared to try, resulting in "soured" OEM relations. It was also strange, to say the least, that Microsoft should offer considerable incentives for OEMs to promote a no-revenue product, and to refrain from promoting Navigator. Joachim Kempin's January 1998 boast to Bill Gates that only four of 60 OEM distribution sub-channels were shipping Navigator is telling evidence of Microsoft's abuse of its power, despite Microsoft's private view as late as May 1998 that "IE4 is fundamentally not compelling".

So far as Judge Jackson's media interviews (Microsoft has complained about this) were concerned, the DoJ says "this was not a substantial question that warranted any significant expenditure of the court's time". As for the technical issue that Microsoft raised concerning the plaintiff states' right to appeal under the Expediting Act, the DoJ noted that Microsoft had asked for the DoJ and state cases to be consolidated "for all purposes". As a safety measure however, the states would file a separate petition before judgement in order to avoid redundant or inconsistent proceedings.

The account continues with a review of how Microsoft sabotaged Java so that Java programs developed on Windows would not run on other systems without significant modification. One of the worst abuses was Microsoft's requirement that if developers wanted early access to Windows information, they would have to use Microsoft's JVM as the default, so ensuring Windows-specific features would have to be used. The resulting incompatibility made no business sense, other than to protect the applications barrier to other market entrants.

Why the Supremes should take it

The legal argument for the Supremes hearing the appeal is founded on the wording of the Expediting Act, which provides that such cases must be of "general public importance in the administration of justice". The DoJ says that the case "has immense importance to our national economy" and notes that by this, Congress meant cases affecting "the economic welfare of this nation". Microsoft clearly agrees, because it said in a motion to the court of appeals that the district court's judgement may cause "the entire United States economy to suffer". There's a note of glee where the DoJ points out that: "Recognising ‘the exceptional importance' of the case, the court of appeals took the extraordinary step of ordering en banc [ie by all non-excluded judges] consideration within an hour of the filing of Microsoft's notices of appeal".

Since the law changed in 1974 to allow the court of appeals to review cases not of "general public importance", the DoJ has only twice invoked the Expediting Act - both in the AT&T breakup case - and each time the Supremes agreed to consider it directly. The DoJ points out that Microsoft "apparently sees value in delay" because of its desire to have the case first considered by the court of appeals. The DoJ concludes that "If this case does not qualify for direct review under the Expediting Act, it is difficult to imagine what future case would".

The DoJ countered arguments by Microsoft that the case was too legally and factually complex for direct appeal by noting that this was the first such appeal for 17 years, and that there were only five matters for the court to determine. Outline argument was presented as to why the DoJ should prevail. Microsoft had complained about hearsay evidence, but Judge Jackson had said several times that he would assess what weight, if any, to give it. Nor was Microsoft denied sufficient opportunity to prepare its case, the DoJ argued, since no limits had been set on its ability to conduct discovery. As for Microsoft's desire to raise "numerous complicated factual issues", the DoJ maintains that the district court was the "main event" for this. There is little precedent for a wholesale reconsideration of a district court's findings of fact.

Of course the Supremes can do pretty well as they wish. Should they decide not to uphold antitrust law, they could send the case to the court of appeals which has already made it rather clear that it has a different view from Congress about the law of fair competition. So far as the complexity of the case is concerned, no court can hope to know and understand all the evidence: the decision is based on the impression given.

The next step will be an opportunity for Microsoft to file next week a brief commenting on the DoJ's broadside, and it will be uphill work. It is unlikely that the Supremes will decide whether to hear the case before October. Meanwhile, Microsoft can carry on without any court-imposed restrictions, and may well manage to restructure its business with its .NET plans so that if the breakup were ordered, it would have much less relevance.

It is often overlooked that when Microsoft previously appeared before the Supremes (over the mistreatment of its temporary staff), it lost. It is hard to guess what the Supremes will decide in this case, but a political dimension to its decision is most likely.

Related links:
The Microsoft brief'
Full DoJ brief