Microsoft Corp. fired back at the government's claim that it has trampled antitrust laws, and a federal judge's declaration that it is a monopoly, in a lengthy "conclusions of law" finding filed last week.
As expected, Microsoft argued that it has attained a position of leadership in the software market by virtue of its technologies and hard work, not via anti-competitive business practices.
"Having an extremely popular product does not make a company a monopolist," Microsoft claimed in its brief.
The software giant relied heavily on a June 1998 ruling by a federal appeals court to underscore its contention that it did not illegally tie its Internet Explorer browser to its Windows 98 operating system.
The appeals court ruled that sufficient consumer benefit existed in the integration of the browser into Windows for the tying to be acceptable.
"The Court of Appeals' standard does not even suggest that Microsoft should be required to offer operating system features on an a la carte basis," Microsoft officials said.
The U.S. Department of Justice charges that Microsoft tied the browser to Windows in an effort to thwart the growth of Netscape Communications, which has since been purchased by America Online.
On Nov. 5, U.S. District Judge Thomas Penfield Jackson issued a findings of fact that indicated he believed the government's case that Microsoft has broken antitrust laws. The Justice Department filed its own "conclusions of law" in early December.
Microsoft and the Justice Department are scheduled to make their final arguments before Jackson on Feb. 22. In the meantime, a federal judge in Chicago is mediating negotiations between the two sides.
Government lawyers failed to prove that it "foreclosed" Netscape's access to over 40 percent of the browser market, Microsoft officials contended, pointing to Netscape's 1998 distribution of some 160 million copies of its Navigator browser.
Microsoft lawyers also disputed the government's claim that it owns an operating system monopoly for Intel-based PCs. Industry estimates indicate that more than 90 percent of PCs run Windows. However, Microsoft officials said the Justice Department did not prove it has "the ability to restrict output and control prices" -- a key factor in determining if it has an illegal monopoly.
The company's legal woes affected its earnings for the quarter that ended Dec.
31. Microsoft settled an antitrust lawsuit filed by Caldera over DR-DOS that cost about 3 cents per share. Based on the company's cap, that could mean a settlement in the $155 million range, although that figure could be much higher, depending on how Microsoft chooses to pay it.
Microsoft's revenue totaled $6.11 billion, or 44 cents per share, for the quarter, the second in the company's fiscal year. Net income came to $2.44 billion.