The pace of recent events made one of the most significant rulings in the history of American antitrust law seem like an anti-climax. The headline news that Microsoft will cease to exist as we have known it, if the government has its way, was thoroughly anticipated in the weeks of final maneuvering.
But on closer inspection there was enough drama and substance to satisfy any observer. Judge Thomas Penfield Jackson’s decision to speed the case in its final stages will certainly be controversial on appeal, as Microsoft will argue that it was deprived of its opportunity to submit more evidence and cross-examine extensively the Justice Department’s consultants who advised on the breakup plan. The tone of Jackson’s final opinion, which flatly stated that Microsoft “has proved untrustworthy in the past,” reminded readers of the terrible cost in credibility that Microsoft has paid as a result of its intransigence in this and prior proceedings before the judge.
Microsoft’s existence now hangs on two weak threads: that it can convince appellate judges that the remedy ordered is unjustified by the facts proved, or that the facts Jackson regards as “proved” are so clearly wrong as to warrant an exceptional decision reversing the trial court on this ground.
The first is much the more promising wager. Jackson concluded that “it is time to put…to the test” by immediate appeal the belief that Microsoft is innocent of any wrongdoing, a belief shared by Microsoft and, as Jackson stingingly put it, “a substantial body of public opinion, some of it rational.” Jackson’s confidence in the strength of his factual findings is justified: The government proved a pattern of business conduct amounting to an illegal attempt to maintain monopoly power, and did so through a compelling range of evidence, including Bill Gates’s aggressive e-mail and his discrediting videotaped testimony denying knowledge of the very e-mail he had written. Microsoft’s defense was inept where it was not self-destructive. Whether, on the other hand, Jackson’s complete acceptance of the government’s strong remedy was justified either by the facts proved or by the preference for a faster road to appellate review will be more difficult to demonstrate to skeptical judges on the Court of Appeals or the Supreme Court.
It is appropriate to be skeptical too about the remedy itself. If fully implemented, it results in two companies, one of which will, like the original Microsoft, possess an apparent monopoly in the market for PC operating systems. The theory is that this monopoly will be successfully undermined by the activities of Microsoft Two, which may choose to distribute, for example, Word and Excel for use with other competing operating systems. This approach to restoring competition is purely speculative. As Jackson himself said in the opinion accompanying his final judgment concerning the intended testimony of proposed Microsoft witnesses, “For the most part they are merely the predictions of purportedly knowledgeable people as to effects which may or may not ensue if the proposed final judgment is entered.” The same is true with respect to the theories of the consultants who helped the government shape its own proposals.