Microsoft's Foes: Foiled Again

A Mar. 6 hearing to examine if Justice's deal with Gates & Co. serves the public interest avoided the key issues critics raise

By Dan Carney

For four long months, Microsoft's enemies have been stewing in public and scheming in private. The Justice Dept.'s decision to settle its epic antitrust suit with the software giant on lenient terms infuriated them. They vowed to have the final word. And one opportunity to do so was the legally required Tunney Act hearing into whether the deal was in the public interest. Surely then, they reasoned, the agreement would be exposed as the cop-out they believe it to be.

That hearing was held before U.S. District Judge Colleen Kollar-Kotelly on Mar. 6, and Microsoft's rivals certainly couldn't be happy with what they saw. Justice's outside counsel, Phillip Beck, made an effective, cogent defense of its narrowly tailored deal. And Microsoft's typically patronizing counsel, John Warden, wasn't quite as annoying as he normally is. Both told Kollar-Kotelly that the terms are what they are because the D.C. Circuit Court of Appeals ruled mostly in favor of the giant software maker, throwing out many of the findings against the company that would have justified something broader.


  Even more troubling for Microsoft's foes was what went unsaid at the long-awaited hearing. It is, of course, risky to read too much into a judge's questions. Even Judge Kollar-Kotelly admonished people in the courtroom not to do so at the beginning of the proceeding. But listening to what she asked -- and didn't ask -- it was hard to get the impression that she was looking at the deal with a particularly critical eye.

The judge seemed to deliberately steer clear of broad comparisons between the proposed settlement and the findings against Microsoft that the appellate court upheld. Never once did she lean back in her chair, rub her chin, and say: "I couldn't help notice, Mr. Beck, that your proposal doesn't contain a word about Java software, even though the appellate court found that Microsoft illegally thwarted its development." Nor did she ask: "Why, Mr. Beck, don't you require Microsoft to end the practice of 'commingling' program code, which the court affirmed was unlawful?"

Questioning along these lines would have gotten at the heart of what Microsoft's adversaries believe isn't addressed in the proposed settlement. But more typical of Kollar-Kotelly's questions was one that began: "Now, tell me this about section III. H2(b)..." She was referring to a subpart of a subsection that deals with exemptions to the software giant's obligations to allow PC makers and others to place non-Microsoft icons on the Windows' Start menu. (One such exemption is when the non-Microsoft product in question is unable to "host a particular activeX control.")


  Whatever an activeX control is, it almost certainly isn't a major issue in ending Microsoft's unfair monopolistic behavior. And Kollar-Kotelly's willingness to dive so deeply into the reeds is telling. Why would a judge inclined toward rejecting a settlement on public-interest grounds be so concerned about some minutiae buried in some subpart about icons?

By the same token, why, if she were looking at scrapping the deal, would she not ask the broader questions? Certainly, glaring dissimilarities between the appellate ruling and the settlement terms exist. Justice believes it has explanations for these, while Microsoft's critics believe otherwise. Why not air the debate? Why not flesh some of these questions out?

That may yet come. On Mar. 11, nine states that refused to join with Justice in the settlement are scheduled to get their day in court. They'll push for their much harsher set of restrictions on Microsoft and will trash the government deal.

In the end, Microsoft's biggest critics may prevail. Perhaps the stacks of briefs attacking the settlement in Judge Kollar-Kotelly's chambers won't go to waste. But judging from her line of questioning on Mar. 6, Redmond's foes can only count the Tunney Act hearing as a missed opportunity.

Carney covers legal affairs for BusinessWeek in Washington

Edited by Beth Belton

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