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| JUSTICE DEPARTMENT REACTION | |
 November 8, 1999 
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Following a background report, Microsoft Chief Operating Officer Bob Herbold and Assistant Attorney General Joel Klein discuss in separate interviews their reactions to the judge's findings of fact.
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JIM LEHRER: Do you agree with Mr. Herbold, this is the third inning of a nine-inning game?
And I would say one thing, Jim, your viewers ought to read this opinion. They ought to go on the Web. They can take a browser of their choice and get there and read these 207 pages. I agree with Mr. Herbold. This is critically important to this country and its economy. And I think only by going through it could you understand how significant, how pervasive, how broad-based these violations, these harms were and I think we ought to stay focused on that quite frankly. JIM LEHRER: So if we stay focused on that, that means that something of a huge magnitude must be done about this, correct? |
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| A remedy is critical | ||||||||||||||||||||
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Jim, this is a game about adding and not subtracting. And the judge found in words that are blistering that Microsoft impaired everyone else from innovating in order to protect its monopoly. And other people out there ought to be doing great things, and then consumers will get an even richer mix, better opportunities and lower prices. That's what competition brings us. You know, competition is one of the things that is wonderfully American. We get it. And what we would like to see in this market operating systems on the desktop is competition. We haven't seen it for a decade. As far as the eye can see if something isn't done, we won't see it. Sure we'll see it elsewhere in the industry because there is no monopoly to impair it -- that's precisely our point -- but I do think the time has come to realize serious impediments to the market, serious harms to consumers, will lead a serious response, Jim.
JOEL KLEIN: On appropriate terms absolutely. But I think for Microsoft to settle the case, they have to come to grips with the court's findings. They are there, they are 207 pages. If they're willing to address those issues and provide meaningful relief so others have an opportunity to innovate and consumers benefit, you bet we'd like to settle. But we're not going to settle simply to say the case has settled and not solve the problems. That would be a dereliction of duty and indeed an abdication of law enforcement. JIM LEHRER: Do you already have a view as to what it would take to settle this case?
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| Laying the ground for antitrust violations | ||||||||||||||||||||
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JIM LEHRER: And each side files briefs with the judge to try to persuade him to use his findings as a way to come up with the right, come up with a way to read the law in view of those findings. I didn't say that very well. JOEL KLEIN: But that's it. In a word. In other words, right now we know what happened. We want to find out the legal significance and each side will file briefs to that effect. After that, we'll get to remedy. And -- JIM LEHRER: Excuse me -- that could happen -- the judge could rule on the legal side of this, about how the law applies to his findings by what, January, sometime in January? JOEL KLEIN: Probably February, I think the final brief is due at the end of January and so would I hope sometime in February. The judge has worked diligently to move the case along quickly, and I would hope that continues.
JOEL KLEIN: I think these are strong, important findings and I am, obviously, I believe these findings lay the predicate for serious antitrust violations -- no question in my mind. We will follow a briefing schedule and I don't engage in predicting what the courts will do. But we're optimistic, Jim. JIM LEHRER: But Judge Jackson -- it was pointed out -- has been overruled a couple of times already on previous rulings involving Microsoft by the appeals court. Are you confident that what he did on Friday holds up? JOEL KLEIN: I am and I think there are two distinctions. He was overruled one time on a consent agreement -- not under the antitrust laws -- in a case that had no facts. We were moving on a very rapid basis for a preliminary injunction and the court did reverse him. This case is all about facts -- 78 days' worth of trial -- literally thousands of exhibits, and you know, ironically -- and this is significant -- virtually all the things that the judge found were based on Microsoft documents. I mean this was a story told through the contemporaneous documents. So I believe those facts lay the predicate for a strong legal ruling and I'm confident that that's a legal ruling that will survive as we move through the process.
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| Looking at the full range of remedies | ||||||||||||||||||||
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JIM LEHRER: Do you believe it's possible, not probable, but possible that this thing could be resolved before the judge gives his legal finding? JOEL KLEIN: Jim, from the Department's point of view, if we see that there is a serious proposal addressing those significant competitive issues, consumer harm and innovation, I believe that such a settlement will be possible. Absolutely. But I do believe you have to come to grips with those findings because I believe they're correct, and a remedy that doesn't address those findings I think would be a mistake for the Department and an abdication of our responsibility to enforce the Sherman Act. JIM LEHRER: Settlement usually involves give and take on both sides. I'm reading from you that the Justice Department doesn't have a position of give on this. JOEL KLEIN: No, I don't think that is right. There are a variety of different ways to address the problem. I don't have a position that says this is not a monetary settlement. We have no private interest in the outcome. Ours is a public responsibility of law enforcement. So in that sense it's not like saying we'll take X dollars instead of Y dollars; however, there are different ways, different mechanisms to address the problem, and I'm willing to engage with respect to those but I'm not willing to take -- so to speak -- half a loaf because I think that is a dereliction of responsibility.
JOEL KLEIN: Well, the kind of things that generally apply in this kind of lawsuit include so-called behavior or conduct remedies, things that say you can no longer engage in this practice or that practice, and as well there are structural remedies, things that say basically you restructure the company in this way on a going-forward basis. And without in any way suggesting that we are implying in one direction or the other, we're looking at the full range of those remedies, looking at the positives and negatives, and doing our due diligence. JIM LEHRER: And isn't the most extreme action to break up the company? JOEL KLEIN: I think different people have different views on that. I think on the one hand, there are people who say that it is extreme in one sense; on the other hand, it limits ongoing involvement and so forth, so I think there are a balance of considerations. And that is precisely what we're looking at, and I think in an enormously, careful, thoughtful way. JIM LEHRER: You said a moment ago finally, Mr. Klein, that there was no advantage in a settlement for settlement's case. But what about if this thing drags on for years, as it could if people continue to appeal, et cetera, et cetera, is there anything, any momentum going or pleasant momentum, favorable momentum to getting this thing behind you? JOEL KLEIN: It's always preferable to get things done quickly but it's more important to get them done right. I don't think this problem, that is Microsoft's exercise of monopoly power and its impairment of innovation and consumer choice -- I don't think that's going to go away in a year or so. And I think if you look back, this has been a 10-year desktop monopoly, as far back as the eye can see. And if you look forward in the absence of a meaningful remedy, I think it will be as far forward as the eye can see. I would prefer to get it done quickly but only if it's done properly. Those, I think, are what the responsibility that you take when you engage in law enforcement under the laws of the United States -- and I believe that's the department's obligation in every case. JIM LEHRER: Mr. Klein, thank you very much. JOEL KLEIN: Thank you, nice to be with you. |
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JOEL
KLEIN: Oh, I don't think that kind of analysis helps. I think is critical
-- what happened on Friday. And if you listen, what Microsoft wants
to talk about is anything but what happened on Friday, which was the
judge found in 207 pages, exactly what happened. He detailed page after
page of pattern and practice of Microsoft harming competition, harming
consumers and harming innovation. I think that is what this is about
and I think it's time that we came to focus on it. 
JOEL
KLEIN: I think a remedy that solves those problems is critical. You
know, Microsoft talks a lot about innovation and I think innovation
is critical in this industry and I also think Microsoft should innovate.
There is absolutely no dispute between the two of us about that. I encourage
Microsoft to innovate. I also encourage Microsoft to let everybody else
innovate.
JIM
LEHRER: All right. Now, Mr. Herbold said that he would love -- "Microsoft
would love to settle this thing" in a direct quote. Would you and
the Justice Department love to settle this thing too right now? 
JOEL
KLEIN: We are currently working on a variety of options, studying them,
we have input from people who are Microsoft's partners, people who are
computer manufacturers who depend on Windows indeed as the only operating
system they can buy. We're talking to serious academics. We'll continue
to do our due diligence. The process is going forward. The court has
not ruled on the legal issues, which is the next step. And so we are
moving forward and analyzing all of this in, I think, a very serious
and important way, Jim.
JIM
LEHRER: Are you waiting for the phone to ring from Microsoft, or are
you prepared -- once you gather all this information whether it's between
now and the time the judge comes up with his legal findings or whatever
-- to call them and say, OK, we have a proposal for settling this. How
-- how does it work, in other words? 
JIM
LEHRER: Is there any doubt in your mind, Mr. Klein, based on what the
judge said Friday, that these findings are going to lead to legal findings
-- are going to lead if it continues down this path toward a very negative
finding and the final result against Microsoft? 
JIM
LEHRER: Have you heard anything either tonight from Mr. Herbold or anybody
else from Microsoft since Friday that makes you believe that Microsoft
understands the gravity of what the judge did on Friday? 
JOEL
KLEIN: I think any of those negotiations should take place in confidence.
And I think it is unlikely that statements and public forum are going
to signal anything of any significance. So we'll wait and see.
JIM
LEHRER: And give us the parameters of...can you give news a general
way what the loaves are here?