Jackson's Hole

Watching the concluding oral argument in U.S. v. Microsoft at the D.C. Circuit Court of Appeal, you can almost hear this faint, high-pitched whine of despair coming from the Department of Justice attorneys:

But they didit. And we proved they did it. Read the internal e-mails. Why isn't everyone more outraged? What more did we have to do here?

But try as they may to invoke for the panel the litany of bad acts, nasty threats, outrageous deals, and misdeeds of the Death Star Corp., the government lawyers cannot arouse the judges. The focus today is on three very narrow legal questions: 1) Microsoft's attempted monopolization; 2) the viability of Judge Thomas Penfield Jackson's remedy; and 3) the severity of Jackson's misconduct in talking to the press. I once heard a court of appeals judge say, if you want to tell your sob story, don't take it to the appellate courts. This panel has proved that, evincing almost no outrage over the past two days, with the exception of their vociferous disgust over Jackson's extra-judicial case commentary. They ask both sides hard questions, although they are (like yesterday) far harder on the government side. But they don't seem to be crying into their beers over injustices done to Netscape or Sun. Whether it is truly a more conservative court than Jackson's or just a less easily shocked court remains to be seen.

The morning opens with Microsoft's Richard Urowsky explaining that Microsoft is not guilty of attempted monopolization, and with only two interruptions from the panel he is permitted to explain why. Then, the first DOJ lawyer, David Frederick (who suffers unduly for the congenital condition of just-not-being-David-Boies), concedes that there is "some lack of clarity" concerning what happened at a June 1995 meeting between Microsoft and Netscape in which a plan to divide markets between the two companies was discussed. Frederick goes on to use the word "concede" six more times today, at least by my count. Conceding to Chief Judge Edwards that the district court's findings reflect confusion between the browser and platform markets, and later conceding to the same point from Sentelle, he adds, "If you'd like me to repeat my earlier concession, I'll do so."

"No," says Sentelle, who always sounds like his mouth has two great wads of tobacco in it. "I'd like you to expand it." Everyone laughs.

Steven Holley argues next for the Microsoft team, on the issue of the breakup remedy ordered by Jackson last summer. Holley, who was always good at trial, reads from a deathly dry prepared speech about the indignities suffered by Microsoft, doing so with all the animation of the little Dutch Boy android at the "It's a Small World" ride. Santelle even reminds him, after many, many long uninterrupted moments of reading, that the rules prohibit reading. Holley seems to read his apology. In effect, he argues, breaking up the company without a hearing will ruin Microsoft, destroy Microsoft products, and harm consumers.

The one point he makes that does seem to resonate with the panel is that breaking up a single unitary company that has not grown as a result of acquisitions is completely without precedent in U.S. history.

Then DOJ's Frederick is back on his feet explaining that Microsoft was never entitled to a whole new trial on remedy, and they knew perfectly well last April that a remedy like this one was likely. Then, he and Sentelle get down to it: What happens if the court vacates or reverses the lower court on the tying claim (Section 1 of the Sherman Act) but agrees with the government on the monopoly or attempted monopoly claims (Section 2 of the act). Well, what then? After much scuffling to-and-fro, Frederick maintains that divestiture would still be the appropriate remedy and tumbles down a manhole with Judge Edwards when he cites the wrong case and is busted on it. He also takes the position that splitting Microsoft will actually benefit shareholders. Which should doubtless drive Microsoft up another three points tonight.

Judge Randolph suggests that it makes more sense to bust up Microsoft into "three companies that each get Windows and all compete with each other," as opposed to one company that gets the applications while the other gets the operating system.