The clear implication: a willingness to sail into uncharted legal waters. “This is obviously the first great case of the information age,” says Randal C. Picker, director of the law and economics program at the University of Chicago Law School and a former Posner clerk. “We’re in virgin territory… this case is going to make new law.”
New law is an unnerving prospect for both sides. Without a settlement, the government’s problem is that anything less than a “structural remedy”–legalese for a breakup of Microsoft–may be seen as a defeat. Microsoft’s problem is even bigger: any outcome other than total vindication will curtail the business practices that made it the colossus it is today.
Options are few. In Microsoft’s view, splitting up the company is not a settlement, but a loss. Meanwhile, the Justice Department won’t accept a mere consent decree, in which the company promises to be nice from now on; it’s still smarting from the failure of a similar 1994 order. That leaves a middle ground of “conduct remedies,” in which, for example, trial Judge Thomas Penfield Jackson could order Microsoft to publish the source code for Windows, allowing competitors to offer rival versions. The company is unlikely to swallow this. As Eleanor M. Fox, an antitrust expert at New York University Law School, points out, the core of Microsoft’s business strategy is “to exclude competition that would commoditize the operating system.”
Microsoft does have one advantage: Judge Posner’s views on antitrust, which enjoy great influence at both the Washington, D.C., circuit court, where any appeal from Judge Jackson’s rulings would be heard, and the Supreme Court. These views can be loosely translated as no blood, no foul. “The focus should be on the effect of a given business practice on consumers, not competitors,” says Daniel Fischel, dean of the University of Chicago Law School. “You wouldn’t try to discourage creation of automobiles because it would hurt horse-and-buggy manufacturers.” Microsoft will argue that embedding its Internet Explorer browser seamlessly into Windows was a benefit to consumers, even if Netscape suffered. It could even be argued, Fischel says, that complaints by competitors are testimony to the satisfaction of Microsoft’s customers.
Still, says Picker, Microsoft takes a “bet-the-company kind of risk” by pursuing the case. Higher courts could find against it. And even if breakup is unlikely, a negative trial record will invite private lawsuits from consumers. This could in turn induce a fatal caution in a company renowned for attacking competition full-bore. Microsoft may live to rue the rumble as a bumble.
