Microsoft today won the skirmish, the battle, and--in light of the leanings of a Bush/Ashcroft Justice Department--probably the war, in its fight against the pesky antitrust suit that's been nipping at its heels. With much of the decision accusing the behemoth of violating the Sherman Act exploded, Microsoft may now go down in history as the Little Monopolist That Could. In the short run, they've bought more time. In the medium run, settlement is probably inevitable, and in the long run, they have almost no possibility of a breakup. Not a bad day's work for a busy monopolist. (Full disclosure: Microsoft publishes Slate.)
In a long-expected move, the D.C. Circuit unanimously (7-0) reversed and vacated the bulk of Judge Thomas Penfield Jackson's decision and eviscerated his remedy in the antitrust case. (Click here for the decision.) The Court of Appeals also disqualified Judge Jackson for misconduct and remanded the case to be heard once again in the district court--but by a different judge. They stopped just short of telling that next district judge precisely how to decide the case on remand but made certain to let the next lucky judge know exactly which tests to use, exactly what standards to employ, and precisely how not to break the company into two, unless they want to meet Jackson's fate on the next round.
If Microsoft won the day, the Justice Department won some moments. The court upheld the monopoly maintenance claim against Microsoft, finding that the company did in fact possess monopoly power and that it willfully maintained that power by playing nastily with the other kids. The court upheld those portions of the Jackson opinion finding that Microsoft had engaged in anti-competitive conduct, entered into unfair licensing agreements with OEMs (computer industry companies), and tried to squash Java and Netscape. It disparaged Microsoft's booby-trapping of Windows for those who would install the competing Internet browser from Netscape, and its exclusive contracts with Internet service providers. The Court of Appeals blew away all Microsoft's intellectual property/copyright justifications for these contracts, dismissing these arguments as dopier than saying your ownership of a baseball bat immunizes you from tort liability. In short, on the monopoly maintenance claim, the Court of Appeals found that if it quacks like a big monopolistic duck, it probably is one. Bad Microsoft.
But then, the per curiam (unsigned) opinion dumped most of Jackson's Findings of Fact and Conclusions of Law--vacating the attempted monopolization claim and modifying the "tying" claim to be re-examined using different standards. [Correction, June 29: In fact, the opinion dumped only most of Jackson's Conclusions of Law, and not his findings of fact. His findings of fact stand.] Reversing the attempted monopolization claim in its entirety, the court blamed the Justice Department and Judge Jackson for failing to properly brief, argue, or prove it. In what will probably be the most crucial element of the decision, the court vacated Jackson's tying claim, remanding the entire issue to the District Court for more findings of fact using a different standard than the one used by Jackson. A monopoly without a tie is like a dead body floating in the river. It's a bad thing, but it's not a crime.
Which gets us to Page 60 of this 125-page document. Where the court makes use of the word "edentulous." Writing as a former law clerk, I confess that the word "edentulous" probably means a law clerk somewhere on the D.C. Circuit is getting a lot of free pizza and beer tonight. The game is Opinion Bingo. Points are earned for working a randomly selected word from Webster's into any published opinion. Here I must also add that such words never have made it past my judge's ruthless editing. Edentulous. Please.
After careful analysis of the merits of each side's claims in the antitrust action, the court turns to Judge Jackson. While not actually calling for his removal from the bench, the opinion stops just short of driving a Bekin's moving van right into his chambers. In a section titled "Trial Proceedings and Remedy," the Court of Appeals vacates Jackson's remedy--breaking up Microsoft into two companies--for three reasons: 1) Jackson's failure to hold evidentiary hearing on remedies; 2) his failure to provide adequate reasons for imposing his remedy; and 3) the massive decrease in the scope of Microsoft's liability following this appeal. In brief, the court scolds Jackson for faking Microsoft out of a remedies hearing, then ordering a breakup that might cost "hundreds of billions of dollars of harm" without bothering to investigate the consequences.
If the prior section excoriates Jackson for being a bad judge, the final section, entitled "Judicial Misconduct," flays him for being an idiot. Here, in painstaking detail, the court sets forth the various provisions of the Judicial Code of Conduct, each of which it deems Judge Jackson to have violated in ways that were "deliberate, repeated, egregious and flagrant." While acknowledging that all the interviews and cozy chats with reporters of which Jackson stands accused are "not in evidence," and are all hearsay, the court proceeds to savage Jackson anyway, with its principal objection being not just to his endless running off at the mouth, but also his "insistence on secrecy--his embargo--[which] made matters worse."
Disproportionate concern is shown by the court for the Auletta factor, decrying Jackson's 10 hours with The New Yorker's Ken Auletta, who might have influenced the judge's ultimate opinion. (Or maybe just explained "browser" to him.) Sparing no pity for "judges who covet publicity, or give the appearance that they do," the court quotes Judge Learned Hand, who once said, "This America of ours, where the passion for publicity is a disease, and where swarms of foolish, tawdry moths dash with rapture into its consuming fire. "
So the trial of this (and last) century goes back to a trial judge now, to be decided on far narrower grounds, and with the likelihood of a breakup all but gone. Microsoft is not off the hook by any means, but it's not battling for its life either. Millions of dollars and six years later, the case will be settled or dropped. Thus ends Joel Klein's holy grail.
Click herefor earlier dispatches from the Microsoft trial.