MS/DOJ: sides square off for last time

The two sides in the Microsoft antitrust case squared off one last time on Tuesday to deliver closing arguments before US District Judge Thomas Penfield Jackson. Now, Jackson must decide whether Microsoft is a bullying monopolist that squashed competition and stifled innovation, or a software company struggling to survive, like many others, in a highly competitive industry.

Microsoft got the last word on Tuesday in closing arguments in its antitrust case, describing the government's lawsuit as a meritless action, built on hearsay evidence and designed to shield the company's largest rivals, IBM Corp and Sun Microsystems Inc, from competition.

Before a largely impassive and mostly silent Judge Jackson, the two sides in the antitrust case completed their closing arguments.

Microsoft chief trial counsel John Warden, his voice at times hoarse, challenged assertions made earlier in the day by government attorneys that Microsoft had engaged in heavy-handed tactics intended to stifle innovation and that it should be punished for anticompetitive acts.

"The antitrust laws are not about the government picking winners or losers," Warden said. "Consumers pick winners or losers under our system."

Pointing to America Online's acquisition of Netscape Communications, the introduction of Web-based applications and the Linux open-source operating system, Warden argued that Microsoft is facing constant competition.

"Even monopolists are supposed to compete hard to win all the competition they can, and such competition plainly benefits consumers," Warden said.

Speaking on the courthouse steps at the end of Tuesday's session, Joel Klein, the Justice Department's antitrust chief, called Microsoft "a monopolist engaged in anticompetitive behaviour, that was not simply their intent, that was the effect".

"This is not about anything but consumer choice and consumer harm; [it is] a question of whether Microsoft will dictate the terms and conditions of doing business or whether the marketplace will do so," Klein said.

"Americans love choice -- consumers have been robbed of those choices by Microsoft," said Iowa's attorney general Tom Miller.

But William Neukom, Microsoft's general counsel, expressed confidence in his company's case. "The record shows that the government has failed to bring forward evidence to prove any allegation."

In a packed ceremonial courtroom designed for large crowds, Judge Jackson was uncharacteristically quiet and didn't probe any of the assertions made by attorneys on either side.

The government, which made its closing arguments in the morning, emphasised two key points: Microsoft's overwhelming dominance of the computer operating systems market, and its propensity towards using that power to hamstring some of the strongest companies in the computer industry, including Netscape, Intel and Compaq Computer.

"Microsoft has maintained an unshakable stranglehold on the market for PC operating system software," said Stephen Houck, an antitrust attorney representing New York state, one of 19 US states joining the Justice Department in its suit against the software giant. Houck said that Microsoft has enjoyed more than 90 per cent market share for its operating systems since 1991.

Houck, together with the government's lead trial counsel, David Boies, drew a narrative of Microsoft's actions. As was the case during the trial, the government attorneys used Microsoft's own memoranda and witness testimony against it. Throughout, they urged Judge Jackson to focus on the contemporaneous documents, and not on Microsoft's subsequent spin on its actions.

"Microsoft has taken its power over the operating system and used that power to squelch potential competition," Boies said. "We think that is exactly what the antitrust laws prohibit."

Both sides on Tuesday focused on what has become one of the key contentions in this case: the infamous June 21, 1995 meeting between Netscape and Microsoft officials, a meeting Boies said that offers "an insight into Microsoft's soul".

At that meeting, the government alleges Microsoft attempted to strike a deal with Netscape that would have divided the internet browser market between the two companies, giving Microsoft control of the browser market for Windows 95. Netscape, in turn, would agree to confine itself to the browser market for Apple Computer systems and earlier versions of Windows.

But Warden challenged every aspect of the government's characterisation of the meeting, accusing Marc Andreessen, Netscape's cofounder, of fabricating notes of the meeting.

"The inference is inescapable -- that these notes were created for the purpose of ginning up some kind of complaint against Microsoft," Warden said. "Regardless of who said what, the facts are that Netscape went full speed ahead after the meeting."

Warden also said that Microsoft never threatened to retaliate against Netscape by giving its browser away for free. On the contrary, Netscape cofounder Jim Clark admitted in deposition testimony that he was well aware of Bill Gates' plan as early as October 1994 to integrate the browser with the operating system and give it away for free.

Regardless of what Gates talked about in 1994, Boies said Microsoft didn't make a final decision to give away its browser until December 1995. "The documents from their files make it clear that it was not done for efficiency."

Warden said the state of competition in this industry is so fierce that one company could never control any market in the way the government alleges.

In addition, Warden said it was improper for the government "under the guise of antitrust enforcement to act as some sort of hall monitor" for the industry.

The case is now officially submitted to Judge Jackson, who is expected to issue his ruling on the facts of the case later this year. After that, both sides will submit written proposals of how they think the judge should tailor his final ruling. Judge Jackson is expected to ask both sides to argue those proposals before him as well. The final ruling is not expected until early next year.

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