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Microsoft: Judgment Day | The Nation

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Microsoft: Judgment Day

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Despite all the palaver, the denouement came quickly. Microsoft's decision to walk away from Judge Richard Posner's mediation efforts and to stake its future on overturning Judge Thomas Penfield Jackson's legal conclusions immediately resulted in the release of a judgment no one is going to overturn. Bill Gates, who as a child probably didn't play well with others, has elected to knock over all the blocks rather than share. Judge Jackson, for his part, has brought the Microsoft Era to a certain and devastating end.

About the Author

Eben Moglen
Eben Moglen, professor of law and legal history at Columbia University Law School, serves without fee as general...

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Eben Moglen has been
representing parties sued by the recording industry and is working on a
book about the death of intellectual property.

The recording
industry has been celebrating the supposed defeat of Napster. The
Court of Appeals for the Ninth Circuit has affirmed the grant of a
preliminary injunction that may well have the effect of closing the
service down completely and ending the commercial existence of
Napster's parent (that is, unless the record companies agree to an
implausible deal Napster has proposed). But despite appearances, what
has happened, far from being a victory, is the beginning of the
industry's end. Even for those who have no particular stake in the
sharing of music on the web, there's value in understanding why the
"victory"over Napster is actually a profound and irreversible
calamity for the record companies. What is now happening to music
will soon be happening to many other forms of "content" in the
information society. The Napster case has much to teach us about the
collapse of publishers generally, and about the liberative
possibilities of the decay of the cultural oligopolies that dominated
the second half of the twentieth century.

The shuttering of
Napster will not achieve the music industry's goals because the
technology of music-sharing no longer requires the centralized
registry of music offered for sharing among the network's listeners
that Napster provided. Freely available software called OpenNap
allows any computer in the world to perform the task of facilitating
sharing; it is already widely used. Napster itself--as it kept
pointing out to increasingly unsympathetic courts--maintained no
inventory of music: It simply allowed listeners to find out what
other listeners were offering to share. Almost all the various
sharing programs in existence can switch from official Napster to
other sharing facilitators with a single click. And when they move,
the music moves with them. Now, in the publicity barrage surrounding
the decision, 60 million Napster users will find out about OpenNap,
which cannot be sued or prohibited because, as free software, no one
controls its distribution and any lawsuits would have to be brought
against all its users worldwide. Suddenly, instead of a problem posed
by one commercial entity that can be closed down or acquired, the
industry will be facing the same technical threat, with no one to sue
but its own customers. No business can survive by suing or harassing
its own market.

The music industry (by which we mean the
five companies that supply about 90 percent of the world's popular
music) is dying not because of Napster but because of an underlying
economic truth. In the world of digital products that can be copied
and moved at no cost, traditional distribution structures, which
depend on the ownership of the content or of the right to distribute,
are fatally inefficient. As John Guare's famous play has drummed into
all our minds, everyone in society is divided from everyone else by
six degrees of separation. The most efficient distribution system in
the world is to let everyone give music to whoever they know would
like it. When music has passed through six hands under the current
distribution system, it hasn't even reached the store. When it has
passed through six hands in a system that doesn't require the
distributor to buy the right to pass it along, it has already reached
several million listeners.

This increase in efficiency
means that composers, songwriters and performers have everything to
gain from making use of the system of unowned or anarchistic
distribution, provided that each listener at the end of the chain
still knows how to pay the artist and feels under some obligation to
do so, or will buy something else--a concert ticket, a T-shirt, a
poster--as a result of having received the music for free. Hundreds
of potential "business models" remain to be explored once the
proprietary distributor has disappeared, no one of which will be
perfect for all artistic producers but all of which will be the
subject of experiment in decades to come, once the dinosaurs are
gone.

No doubt there will be some immediate pain that will
be felt by artists rather than the shareholders of music
conglomerates. The greatest of celebrity musicians will do fine under
any system, while those who are currently waiting on tables or
driving a cab to support themselves have nothing to lose. For the
signed recording artists just barely making it, on the other hand,
the changes are of legitimate concern. But musicians as a whole stand
to gain far more than they lose. Their wholesale defection from the
existing distribution system is about to begin, leaving the music
industry--like manuscript illuminators, piano-roll manufacturers and
letterpress printers--a quaint and diminutive relic of a passé
economy.

The industry's giants won't disappear overnight,
or perhaps at all. But because their role as owner-distributors makes
no economic sense, they will have to become suppliers of services in
the production and promotion of music. Advertising agencies,
production services consultants, packagers--they will be anything but
owners of the music they market to the world.

What is most
important about this phenomenon is that it applies to everything that
can be distributed as a stream of digital bits by the simple human
mechanism of passing it along. The result will be more music, poetry,
photography and journalism available to a far wider audience. Artists
will see a whole new world of readers, listeners and viewers; though
each audience member will be paying less, the artist won't have to
take the small end of a split determined by the distribution
oligarchs who have cheated and swindled them ever since Edison. For
those who worry about the cultural, economic and political power of
the global media companies, the dreamed-of revolution is at hand. The
industry may right now be making a joyful noise unto the Lord, but it
is we, not they, who are about to enter the promised land.

The fate of Microsoft is now sealed. Whatever remedy Judge Jackson may eventually decide to impose, Microsoft will be distracted, eroded and dismembered by the avalanche of private antitrust litigation that Judge Jackson's findings of fact and conclusions of law make possible. The most difficult burden for most antitrust plaintiffs is that of proving that their adversary possesses monopoly power in the relevant market; the second most difficult is that of proving that their adversary's actions constituted an attempt to achieve or maintain that monopoly power by forbidden means. Now any firm that believes that Microsoft has deprived it of fair opportunities to compete in the market for PC software need not prove either of those matters. Jackson's judgment means that the facts he found last November are unassailable by Microsoft in other litigation, the effect of what lawyers call "collateral estoppel." In order to recover antitrust damages, which under the Sherman Antitrust Act are triple their provable monetary losses, firms need only prove that Microsoft's conduct--as a proven monopolist that maintained its monopoly by illegal means--caused them monetary harm. Microsoft faces at least a decade of litigation with all the market participants it has threatened, knee-capped or destroyed. Gates's e-mail, that reservoir of documented commercial knavery unprecedented in the history of American antitrust litigation, will be in constant demand. The litigation will constrain Microsoft, opening opportunities for new competitors to emerge free of the hitherto omnipresent concern with Microsoft's probable response to each and every attempt to create new protocols and possibilities for the Net.

By the evening of April 3, mere hours after release of the judgment, the nature of the Microsoft response was clear. The right of appeal, the company said, would result in Microsoft's exoneration. But that is unlikely--even if the case goes all the way to the Supreme Court. Judge Jackson's legal conclusions are painstakingly related to his factual findings, which no appellate court will disturb unless they are "clearly erroneous," a standard that is unlikely to be met in the mind of even the most skeptical appellate judge. Jackson's application of antitrust doctrine in his opinion, which accepted most but not all of the plaintiffs' legal theories, was deliberately orthodox, not experimental or innovative in any respect. And despite the pending appeal, the collateral-estoppel effect begins immediately, as will the flood of private litigation.

Gates also declared that Jackson's opinion "turns on its head the reality that consumers know"--that Windows made computers more accessible to people throughout society. But antitrust is not only about consumers' welfare. As I wrote in these pages [see Moglen, "Antitrust and American Democracy," November 30, 1998], antitrust is also, and primarily, about protecting democracy from overconcentrations of private economic power. Gates's invocation of "what consumers know" distorts antitrust law to lose this point.

How PCs work in the era of the Internet is an essentially political question. If Microsoft had wanted to give desktop icons to the Democratic and Republican parties but not to the Greens, no seller of a "Green PC," designed to appeal to the socially conscious buyer, could have added a Green Party icon without Microsoft's permission. Monopolization of the PC operating system by a single commercial entity determined uncounted political and social questions by default, in ways that consumers never had a chance to understand.

This power to control the environment of the PC, in which more and more of us spend increasing proportions of our lives, conveys a power to shape, at a level so ubiquitous as to be barely noticeable to the average user, the nature of the public discourse. Which Internet medium can everyone get to with one click? Which points of view are considered appropriate for everyone's computer to represent? Throughout the era of the Microsoft monopoly, those decisions were made by a single private power, ceding it more undivided leverage over our collective symbolic environment than anyone in our society. For this reason, the destruction of that monopoly is far more important to the politics of our age than destruction of the petroleum or tobacco trusts was in the era of Theodore Roosevelt. Microsoft will no doubt argue that this increase in diversity will somehow destroy the benefit to consumers of an environment of widespread technical compatibility. This argument is a fallacy. Consumers will not have less good software to use once the Microsoft we know has perished. The culture of the Net will be in all ways healthier, and the politics of the information society will have lost its single most undemocratic feature.

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