Experts: DOJ pressing ahead on Microsoft case

When President Bush took office last January, supporters of the government's antitrust case against Microsoft Corp. feared that the new administration would seek an easy settlement. But legal experts on both sides of the fight said today that they see little difference so far between the current administration and the Clinton administration that initiated the historic lawsuit.

The Justice Department "has determined to press ahead in a very vigorous way," said Kenneth Starr, a former judge of the U.S. Court of Appeals, which heard the case, and the prosecutor who led the Whitewater probe that ultimately uncovered President Clinton's affair with Monica Lewinsky.

Starr, who is now advising ProComp, a trade group that includes Microsoft competitors backing the government's case, cited a government filing earlier this month seeking expedited action as evidence. In it, the U.S. Department of Justice and 19 states wrote, "Delay in imposing an effective remedy inflicts substantial and widespread consumer injury and needlessly prolongs uncertainty in the computer industry."

The message from the government is, "we really do not want to dally, the stakes in this industry are too high," said Starr, who appeared on a Federalist Society-sponsored panel to discuss the case with former judge Robert Bork; C. Boyden Gray, former White House counsel in the first Bush administration; and George Priest, a Yale University law school professor.

Priest, who has consulted for Microsoft, agreed that the Bush administration hasn't shifted course on antitrust enforcement. Moreover, "there are serious political difficulties with a settlement that looks as if it's disregarding what the Court of Appeals has found illegal in Microsoft's behavior."

Nonetheless, Priest argued that the Court of Appeals' June 28 decision was a victory for the company that won't affect its new XP operating system or future operating system innovations. He called a possible breakup of the company a "fantasy."

Last month, the U.S. Court of Appeals upheld a lower-court finding that Microsoft had illegally maintained a monopoly in operating systems. But in its decision, the court rejected trial Judge Thomas Penfield Jackson's plan to divide the company in two, thus separating its operating system unit from other lines of business. The appeals court also overturned the lower court's finding that Microsoft had illegally monopolized the browser market.

On the third major issue before the court -- whether the company had illegally tied the browser to the operating system -- the appeals court, in remanding the case to the lower court, said the tying issue had to be considered using a different legal standard that also also considers the consumer benefit of integration.

In a seemingly contradictory part of the decision, the appeals court said Microsoft's commingling of the Internet Explorer code with the operating system code was anticompetitive. But Priest said commingling is a technical issue similar to the court's faulting the company for not allowing consumers to add or remove the browser.

That issue "really amounts to very little," he said. The company earlier this month said it would restore the Add/Remove function for Internet Explorer.

While Microsoft faces ongoing litigation, particularly from private parties seeking damages in the wake of the appeals court decision, Priest said he doesn't believe it "will in any way be crucial to the country or to consumers" because it will "not in any way deter innovation."

Bork, who, like Starr, is advising ProComp, is convinced that the government still has a "sound case for structural relief."

"If you have injunctive relief, it will turn into a regulatory mess, in which the Department of Justice will act as a regulatory agency," said Bork. "You will have a much cleaner and longer effect and restore competition if you break Microsoft into three parts -- that is, applications, operating system and browser."

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