Bill Takes It on the Chin: In a Blow to the Heart of Microsoft, a Judge Finds That Gates's Empire Is a Monopolistic Force Whose Tactics Hurt Competition and Consumers. So What Will Happen Next?
Judge Thomas Penfield Jackson had let it be known that it would be late on a Friday afternoon--after Wall Street shut down for the weekend-- when he would finally break his silence on the biggest antitrust showdown in the digital age. By midday, everybody sensed it: after 76 catfighting days in court, more than 100 teeth-pulling depositions and enough pages of evidence to paper a certain billionaire's megamansion on Lake Washington, this was that Friday. Jackson would release his findings of fact, the first step toward judgment in the Department of Justice's sweeping case against the $500 billion software company Microsoft. At company headquarters in Redmond, Wash., PR infantry, lieutenants and generals organized a "rapid response team," with guides assigned to connect targeted journalists to the proper spinmeisters. At the DOJ's antitrust division, which had been working for two years to prove that the world's most successful software company played dirty, the vigil was "what it's like for a father waiting for a baby to be born," said its leader, Joel Klein. His team was confident that the judge would side with its version of events, but it also expected Judge Jackson to throw Microsoft some bones. "You almost never have someone's head on a spike," said one Justice insider.
But in a tersely worded 207-page ruling, Judge Jackson seemed to have done just that. In the course of his tome, bound by the Government Printing Office and instantly downloaded by thousands of Internet looky-loos, he slickly mounted one tousle-haired, bespectacled billionaire's noggin on the halberd of the evidence. Presumably these findings of fact are only a prelude to the actual ruling of law expected early next year. But considering that Judge Jackson documents at length how Microsoft is a monopolistic violator that not only bullies its competitors but also rips off the public by stifling innovation and overcharging for its software, there's little doubt about his subsequent ruling. Bring me the head of Bill Gates!
Here are some of Jackson's facts: the way to determine whether Microsoft is a monopoly is not the overall computer marketplace but only the market for Intel-compatible computers that are almost solely Microsoft's domain. Therefore Microsoft is a monopoly. What's more, the monopoly is self-sustaining and unlikely to be challenged. (Forget about those threats from Linux software, Internet computers or palmtops.) Even Microsoft's huge expenditures on R&D don't mean that it's providing innovations for customer benefit: it's done to "push the emergence of competition even farther into the future." In fact (as the judge has it) Microsoft's actions "have harmed consumers in ways that are immediate and easily discernible." By suppressing the competition, he concludes, Microsoft has made computers less innovative, more expensive, more troublesome and harder to use--all to the detriment of the schmoes behind the keyboard.
This last contention pleased the government the most. Many observers had believed that the trial established how a Microsoft monopoly bulldozed its competitors. It was a shakier proposition whether computer users suffered from Microsoft's actions. But Judge Jackson concluded that even building Internet software into Windows, gratis, was no bonanza for consumers. It made the system run slower, he griped, and caused more crashes.
The Feds, of course, were exuberant. "This is a great victory for consumers," crowed Attorney General Janet Reno. Before going to bed on Friday, the wife of Reno's hired litigator, David Boies, told him, "Today was a great career for you."
It was also a banner day among the legions of Microsoft haters in Silicon Valley. "It's a vindication of what we've been saying all along," says Jim Barksdale, former CEO of Netscape, who rates Judge Jackson's handiwork, "11 on a scale of 10." Some Microsoft critics didn't even wait until the bits were downloaded before declaring that the only proper judicial remedy for such misdeeds was a dismantling of the Campus That Bill Built. …