MS refuses judge's order, antitrust meltdown to follow?

Two days ago Judge Colleen Kollar-Kotelly issued an order demanding a measure of compromise from the warring parties, and yesterday Microsoft refused to comply. So the scene is now set for a collision that could take down the DoJ-Microsoft settlement and set the whole trial roadshow in motion again.

CKK was hearing closing arguments in the dissenting states antitrust case yesterday, and had told the states and Microsoft to come up with some flexibility. The states did, Microsoft did not, and although we should take into account that it was actually a lot more difficult for Microsoft to bend, by utterly rejecting the notion it is playing a dangerous game for high stakes.

The states had been asked to prioritise the measures they felt would be most necessary in the event of their proposals being rejected, and to suggest how the DoJ-MS settlement could be modified to make it more acceptable to them. This is, as you can see, a pretty easy task, and they came back with the need for technical disclosure and protection from restrictive contracts and retaliation for PC manufacturers. Eminently reasonable, no?

Ah, but the questions for Microsoft were much nastier. In the event of its favoured remedies proposal being rejected, it was asked to "identify the provisions contained in the Plaintiffs' proposed remedy which, if included in the Court's remedy, would prove least onerous to Defendant, yet remain effective as a remedy." So, CKK is saying, just imagine I'm going to torch your little deal and give you something worse. Tell me which of the measures you've been utterly rejecting would hurt least, yet still hurt enough to work.

There's really no answer to that if you've spent the entirety of the states' hearings out on the end of a branch with a saw. She has an acid little sting in the tail too: "As Defendant is well aware, its proposal has been criticized for 'exceptions which swallow the rule.'" Indeed.

The options for Microsoft's attorneys were limited. They could maybe have gone for dumb insolence, going through the motions and coming up with something long and ludicrous that didn't answer the questions the way CKK wanted. Or, they could just say no, it is absolutely impossible for us to address this because the settlement we've already negotiated does the job, while the states' proposed remedy is an unacceptable and unworkable wrecking document.

Which is the route they went for. The states' proposal was "fundamentally flawed," said Microsoft attorney John Warden (we trust Microsoft gets the words cheaper when the lawyers use them over and over again). The proposals would hurt consumers, cause "enforcement chaos," and couldn't be mended by changing a few words here and there (which is, ahem, what Microsoft seems to be good at). "We can't fix it."

So that's a no, then? This next bit is however possibly most significant: "We have been through this. We negotiated. We went as far as we can go. That's the deal."

Remind you of something? One of the kites Microsoft's attorneys have been flying is the notion that the states have no business interfering in the DoJ deal in the first place, and the judge oughtn't to be messing around with it either. She should just sign it off, and that's that. CKK made it pretty clear during the hearings that that she didn't buy this one, so it was no surprise when she formally kicked it into touch last week. But here we have Warden, the next week, saying pretty much the same thing - we can't change it, it should be accepted, that's the deal.

So you can see how the big train wreck happens. If CKK tosses the MS-DoJ deal or requires significant changes, then from Microsoft's point of view the deal could well be off. Which would mean its new friends at the DoJ would have to stop being friends and resume litigation - wouldn't that be an amusing process to observe, considering that its high command has gone on record as saying the negotiated deal is better than anything they could have achieved if they'd continued litigating? Dear oh dear.

It is however possible that Microsoft believes something along those lines. Some of the states' proposals would certainly be painful for the company, but others could just about be accepted without the world ending. So if the company really won't deal, it must really think it can come out of the other end with something similar to, or even better than, the existing deal. Or it might just have myopia induced by a previous victory.

Back in the days of the MS-DoJ consent decree, the one that the DoJ lashed up so badly that it subsequently wound up with the whole antitrust matter, Judge Stanley Sporkin revolted and refused to sign it off. We feel sure that if we dug around the records we'd find somebody saying something pretty similar to: "We have been through this. We negotiated. We went as far as we can go. That's the deal." Which was as true then as it is now.

Then, however, there weren't any pesky dissenting states. Microsoft and the DoJ had cut a deal, the judge was not supposed to be messing around trying to change it, he was just supposed to sign it and go away. So Mad Stan was removed, and an alternative judge signed the decree. One Judge Thomas Penfield Jackson, as we recall... ®