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Microsoft Trial Update

June 25, 1999 at 12:00 AM EDT


TERENCE SMITH: Testimony in the federal antitrust trial of the Microsoft Corporation ended yesterday, eight months after the proceedings began, but the trial in which the Justice Department and 19 states are suing Microsoft for illegally using its dominance to thwart competition is far from over. Here to update us is Joel Brinkley, who is covering the trial for the New York Times. Joel, welcome.


TERENCE SMITH: What is the situation now? The testimony is over, but the trial is not.

JOEL BRINKLEY: Antitrust trials have their own unique and archaic procedures and under — under those next in August, the government and Microsoft each offer what are called findings of fact in which they give a brief, offering their best case for themselves. Then the following month they have oral arguments in court, which will last a couple of days. Then the most interesting thing is the judge offers his own finding of fact, which is a first cut at a verdict when he tells everybody what he believes. Right after that — and this is sort of unique — the government and Microsoft then offer conclusions of law where they cite cases justifying their point of view. And what that means is that the judge can use either Microsoft or the government to do the research for him, citing the case law to support the findings of facts he has issued, and then late this year, early next year there will be a ruling.

TERENCE SMITH: I read today, Joel, that if it is appealed by either side his trial could go on to 2002. That must be a daunting prospect those of you who sit there every day.

JOEL BRINKLEY: That’s very possible. Microsoft will almost certainly appeal if they lose, and most people at this point expect that they will lose. They will go to the appeals court and then to the Supreme Court, and that could easily go to 2002.

TERENCE SMITH: Why do you say that, that most people feel — that people who are sitting there watching it every day feel that Microsoft may lose?

JOEL BRINKLEY: No one who has watched this case could come to any conclusion but that the government has presented an extraordinarily effective case with embarrassing e-mails and testimony and that Microsoft’s defense has been at best ham-handed and often quite embarrassing in its own way. One repeated phenomenon is that Microsoft’s defense team would present a defense in court and then the government would present e-mail or public statements by Microsoft’s senior officials showing that they didn’t believe it, so Microsoft undercut its own defense time and time again, even on the last day.

TERENCE SMITH: If that’s the case, is there a possibility of a settlement? I know there have been settlement talks. Is there a possibility of a settlement?

JOEL BRINKLEY: The judge trying the case has encouraged the two sides to work towards settlement. They’ve had settlement talks off and on for more than a year, and they’ve even had them recently, but they’re pretty far apart. The government is fairly confident of its case. Microsoft believes that even though they have been humiliated in court that case law stands on their side and they would win on appeal, so the government believes that if there’s to be a settlement, it has to be — offer a fairly drastic remedy, one that Microsoft is not likely to offer on its own.

TERENCE SMITH: Which would be what, just for example, what would Microsoft have to do to satisfy the government?

JOEL BRINKLEY: The range of remedies available is requiring them to modify the kinds of contracts they offer, but that’s been tried before in a previous case, and Microsoft went about its business anyway, so I don’t think that the government would settle for that. The range of solutions rums from that all the way to breaking the company up. Not many people watching this believe the government will ask for that, or the judge will order that. The crux of the problem with Microsoft as the government has depicted it is that they use their dominance in Windows operating systems to force competitors and other software companies to follow their directions on other issues, so one often discussed remedy is to force Microsoft to license the Windows secret code — the computer code that makes it up — to other companies so that other companies can also make Windows operating systems and begin to compete with Microsoft on this same territory.

TERENCE SMITH: So they could, it’s within their power, Microsoft’s power, to settle this case at practically any point.

JOEL BRINKLEY: Today, tomorrow, or the next day.

TERENCE SMITH: What are the stakes for the consumer, for the public, for antitrust law, and for the industry in this case?

JOEL BRINKLEY: The government argues that the stakes — the immediate stakes are innovation in the computer industry, that Microsoft allows only the innovation it finds useful for its own business interest, but there’s much more at stake in the future. Personal computers are going to be important for a long time, but there are a whole new set of devices that are coming into people’s homes, set-top boxes for digital television, hand-held computers, even new toys that use operating systems — the Sony Play Station toy, for example — use operating systems. We have no way to know what direction the information age is going to take us, and at stake is whether one company is going to be allowed to dominate not only the PC industry but all these other new devices that are going to come into our lives in the years ahead.

TERENCE SMITH: I have read, in fact, that it is already — this trial — the mere existence of the trial is changing the industry and changing the way Microsoft does business. Is it?

JOEL BRINKLEY: In fact. Now, whether that’s a temporary phenomenon or a long-lasting one we don’t know. Microsoft has loosened some of its contracts and allowed personal computer companies to do things it would not otherwise have allowed probably because they realize if they were as hard-handed as they normally are that that could turn up in court soon enough, so whether this new liberal approach that the company’s using toward PC manufacturers will last beyond the trial we don’t know, but in the meantime, computer manufacturers and software manufacturers are emboldened to try things they haven’t ever tried before. Companies that were afraid to offer competing Web browsers, for example, because of retribution from Microsoft until last year, are now doing it without had I qualms. Even a different operating system is being sold with some personal computers, and that never would have been tried before.

TERENCE SMITH: So the system’s changing even as the trial goes on and on?

JOEL BRINKLEY: Exactly right.

TERENCE SMITH: And on. All right. Thanks very much, Joel Brinkley, thank you.