The Microsoft Decision: A Few More Thoughts

A few more thoughts on the Microsoft (MSFT) finding-of-fact document from U.S. District Judge Thomas Penfield Jackson:

Unspoken, generally, so far, is the biggest threat of all to Microsoft: If the findings of illegal use of its monopoly stand and Jackson imposes his own schedule of remedies, then state attorneys general across the country (not just the 19 already in this) start jumping on Microsoft with huge claims for losses suffered by the residents of their respective states.

I don't expect to see explicit financial penalties in Jackson's proposed remedies -- if Microsoft and the Justice Department don't settle this with a consent decree, as I anticipate, before it gets to that point.

But if the finding that Microsoft acted illegally as a monopolist stands, the penalties it could be tagged with in judgments or settlements with all those states are truly awesome.

Indeed, I think the potential for unbelievably expensive litigation by the state attorneys general is the single biggest negative for Microsoft's stock price going forward -- a far greater threat than any remedy the judge may propose.

Could the attorneys general really prove substantial cash damages for their residents from Microsoft's actions? Maybe yes, maybe no -- but you can already hear them purring with anticipation over the opportunity. Remember that in this highly politicized world, a state attorney general -- always a profoundly political animal -- stands to gain in terms of his or her public profile from pressing such an action, win or lose.

That's yet another incentive for Microsoft to negotiate a settlement with the DOJ. No doubt the DOJ will want to protect the options of its state-AG trial partners by not letting Microsoft off the hook in any negotiated agreement through much softer language.

Microsoft Decision: Join the discussion on TSC Message Boards.

But this opportunity for negotiating an end to this madness is Microsoft's last, best chance to fend off those immense, dangerous lawsuits -- and immense damage claims -- from the state attorneys general. Blowing this chance would be a mistake and could be a catastrophe for Microsoft shareholders.

Listen up, Bill and Steve. And end this migraine.

Of course, some would argue that the substantial risk in any settlement of leaving just enough of that finding on the table to encourage states to move ahead with these high-profile lawsuits is the best possible argument for fighting this tooth and nail, all the way through to the Supreme Court.

You makes yer bet, and you takes yer chances...

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A fair number of readers, among the hundreds who have written me since this story broke Friday night, have expressed hope, even confidence, that on the appeal by Microsoft they think inevitable, a higher court will throw out Jackson's findings of fact, completely changing the tenor of proposed remedies.

Don't hold your breath. It is extremely uncommon for appellate courts to meddle with trial judges' findings of fact. I think there's almost no chance the appellate process (assuming there is an appeal) will reverse the finding of Microsoft's monopoly status.

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Speaking of monopoly, it's important to recall that it is not illegal to create or function as a monopoly. Heck, we have lots of monopolies in the country. The trick under the Sherman Antitrust Act is that if you do create a monopoly, you can't use that monopoly in certain ways -- for example, artificially impeding competitors' distribution or funding the market success of additional products through artificially low prices supported by the revenue streams from the products that created and fuel your monopoly.

"Monopolist!" sounds like a harsh and cruel charge to lay at any business' door. Socially, perhaps, but not under law. Benign monopolies -- the definition of which, of course, lies in the eye of the beholder -- are a part of everyday capitalism.

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Have you read the message boards we've had up on TSC about the Microsoft-DOJ contretemps? If not, you owe it to yourself to immerse yourself in these boards for a while. Our TSC message boards continue to amaze me with substantive, intelligent comments. If you've given up on reading message boards because you're tired of the juvenile remarks, cheerleading, personal attacks and off-topic nonsense that characterize so many of them, give boards another chance!

Speaking of message boards, a number of the people who've posted on the Microsoft issue have said nice things about me -- always welcome! -- and then have gone on to disagree with parts of my columns on the findings of fact. A couple of those who disagreed with me on the boards even sent separate, private emails to me, apologizing for their public dissent.

No way! We built these boards and maintain them (at considerable effort) because we value the idea of community among TSC subscribers. And communities are full of vigorous debate, loud dissent, outrageous opinions -- and the insight that grows from the full and often-noisy expression of differing views.

Sure, like everyone at TSC, I welcome and appreciate the kind words. But arguing with me or anyone else here is in part what the TSC message boards are about: our effort to give subscribers a platform as bully as our own.

Give us your toughest, most plainspoken thoughts. And don't be surprised if, in our ongoing dialogue with you, we come roaring back!

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More than one poster on the Microsoft-DOJ boards found something sinister about the fact that the judge's decision was posted Friday night in three formats: as "live" .HTML (which could be read online and saved as .HTML, if you wished), as an Adobe Acrobat .PDF file and as a WordPerfect 6.0 word-processing document.

What? No Microsoft Word-format version? Ah-hah! Clear evidence of the judge's built-in bias. Guilty! Hang him!

I don't think so. WordPerfect was simply the tool at hand in the judge's office, because WordPerfect is widely used as the official, supported government word-processing software.

We can dis this judge with lots of personal opinions about his wisdom and judiciousness, but let's not descend to knocking him for the word processor the GSA provided on the PCs he and his assistant use.

Besides, recent versions of Microsoft Word can easily translate WordPerfect-format files and open them as what appear to be native Word files.

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Finally, if you haven't read the judge's findings of fact yourself and are learning about them only secondhand from people like me, you may want to go to the source and see them for yourselves. Though, at 207 pages, the document isn't short, it's clearly written and worth perusing, for anyone interested in this issue.

You can buy a copy for $25 from the Government Printing Office (202-512-1800, from 8 a.m. to 4 p.m. ET; ask for stock number 028-004-00113-0) or you can grab your own copy, for free, from the special Web site that the GPO has set up.

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