Jackson Issues Conclusions of Law; Microsoft Will Appeal

(April 4, 2000) U.S. District Court Judge Thomas Jackson released his Conclusions of Law and Order in the government's antitrust case against Microsoft on Monday April 3. Microsoft promptly announced that it will appeal.

Judge Jackson wrote in his Conclusions of Law that "the Court concludes that Microsoft maintained its monopoly power by anticompetitive means and attempted to monopolize the Web browser market, both in violation of § 2. Microsoft also violated § 1 of the Sherman Act by unlawfully tying its Web browser to its operating system."

Judge Jackson further found that "violations of the Sherman Act also satisfies the elements of analogous causes of action arising under the laws of each plaintiff state. For this reason, and for others stated below, the Court holds Microsoft liable under those particular state laws as well."

However, Judge Jackson did not find against Microsoft on the first claim for relief of the Department of Justice's original Complaint. He wrote: "The facts found do not support the conclusion, however, that the effect of Microsoft's marketing arrangements with other companies constituted unlawful exclusive dealing under criteria established by leading decisions under § 1."

The Conclusions of Law and Order did not impose any remedies.

Judge Jackson's release of the Conclusions of Law followed immediately upon Judge Richard Posner's announcement on April 1 that his mediation efforts had failed.

Judge Posner released a statement in which he said: "Since my acceptance of this assignment on November 19 of last year, I have endeavored to find common ground that might enable the parties to settle their differences without further litigation. Unfortunately, the quest has proved fruitless."

He added that "I particularly want to emphasize that the collapse of the mediation is not due to any lack of skill, flexibility, energy, determination, or professionalism on the part of the Department of Justice and Microsoft Corporation." This comment conspicuously omitted reference to the state parties to the lawsuit.

Microsoft also announced that it would appeal. The company issued a statement late Monday: "Today's ruling was not unexpected, given the District Court's previous rulings. Microsoft will request an expedited review by the U.S. Court of Appeals, following a remedies phase and final decree. The appeal will stress a 1998 U.S. Court of Appeals decision that affirmed Microsoft's right to support the Internet in the Windows operating system."

"We believe we have strong grounds for an appeal based on this ruling," said Bill Neukom, Microsoft's EVP for Law and Corporate Affairs. "As the Appeals Court already has ruled, it is a mistake for government regulators or the courts to try to design high-technology products. Government regulation of software product design would surely slow innovation and harm consumers."

Neukom continued that, "It's important for people to understand that today's court ruling is just one step in a legal process that could last several years. We worked extremely hard to resolve this case in mediation, but the divisions between the DOJ and the States, and their extreme demands, made settlement impossible."

Bill Gates

"As we look ahead to the appeals process, innovation will continue to be the No. 1 priority at Microsoft," said Bill Gates. "While we did everything we could to settle this case, and will continue to look for new opportunities to resolve it without further litigation, we believe we have a strong case on appeal. The Appeals Court already has affirmed Microsoft's right to build Internet capabilities into the Windows operating system to benefit consumers."

Judge Jackson's ruling also prompted many legislators, interest groups, and lawyers to comment.

House Majority Leader Dick Armey (R-TX), who was an economics professor before being elected to Congress, released a scathing criticism. "Microsoft is right to appeal this ruling. The government's case stands on the shifting sands of a rapidly changing marketplace. Their premise is quickly becoming antiquated. Dwelling on the past only prevents the development of new technologies that bring benefits to consumers."

In contrast, Sen. Orrin Hatch (R-UT) released a statement praising the ruling. "Many of the practices Judge Jackson held to violate the antitrust laws were highlighted in the hearings the Judiciary Committee held during the past two years. If left unchecked, some of Microsoft’s practices would choke further innovation and consumer choice. The court’s conclusions today are a further validation of the Judiciary Committee’s concerns in examining Microsoft’s practices."

Members of the Washington State delegation in Congress criticized the ruling. For example, Rep. Jennifer Dunn (R-WA) stated, "I'm deeply disappointed with Judge Jackson's decision. I am confident that ultimately Microsoft will win this case on appeal, as they have in the past."

Jonathan Zuck, President of the Association for Competitive Technology, issued a statement. "Now we have a good idea of what it would be like to have the government run the computer industry. Not surprisingly, the conclusions made by Judge Jackson, reveal a fundamental lack of understanding of the IT industry. At a time when everyone outside the courtroom is experiencing a period of unprecedented growth and innovation in information technology, Judge Jackson describes a world of limited competition and hampered innovation. Ironically, Judge Jackson is painting a vivid picture of an industry run by lawyers and judges."