UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
|
|
|
|
|
|
|
|
|
UNITED STATES OF AMERICA,
|
|
|
|
|
|
Plaintiff,
|
|
|
|
|
|
v.
|
|
Civil Action No. 98-1232 (TPJ
|
|
|
|
MICROSOFT CORPORATION,
|
|
|
|
|
|
Defendant.
|
|
|
|
|
|
|
|
|
|
|
|
STATE OF NEW YORK, et al.,
|
|
|
|
|
|
Plaintiffs,
|
|
|
|
|
|
v.
|
|
|
|
|
|
MICROSOFT CORPORATION,
|
|
|
|
|
|
Defendant.
|
|
|
|
|
|
|
|
Civil Action No. 98-1233 (TPJ
|
|
|
|
MICROSOFT CORPORATION,
|
|
|
|
|
|
Counterclaim-Plaintiff,
|
|
|
|
|
|
v.
|
|
|
|
|
|
ELIOT SPITZER, attorney
|
|
|
general of the State of
|
|
|
New York, in his official
|
|
|
capacity, et al.,
|
|
|
|
|
|
Counterclaim-Defendants.
|
|
|
|
|
|
| |
|
MEMORANDUM AND ORDER
These cases are before the Court for disposition of the sole matter presently
remaining for decision by the trial court, namely, entry of appropriate relief
for the violations of the Sherman Act, ยงยง 1 and 2, and various state laws
committed by the defendant Microsoft Corporation as found by Court in accordance
with its Findings of Fact and Conclusions of Law. Final judgment will be entered
contemporaneously herewith. No further proceedings will be required.
The Court has been presented by plaintiffs with a proposed form of final
judgment that would mandate both conduct modification and structural
reorganization by the defendant when fully implemented. Microsoft has responded
with a motion for summary rejection of structural reorganization and a request
for months of additional time to oppose the relief sought in all other respects.
Microsoft claims, in effect, to have been surprised by the "draconian" and
"unprecedented" remedy the plaintiffs recommend. What it proposes is yet another
round of discovery, to be followed by a second trial - in essence an ex
post and de facto bifurcation of the case already
considered and rejected by the Court.
Microsoft's profession of surprise is not credible.(1) From
the inception of this case Microsoft knew, from well-established Supreme Court
precedents dating from the beginning of the last century, that a mandated
divestiture was a possibility, if not a probability, in the event of an adverse
result at trial. At the conclusion of the trial the Court's Findings of Fact
gave clear warning to Microsoft that the result would likely be adverse, yet the
Court delayed entry of its Conclusions of Law for five months, and enlisted the
services of a distinguished mediator, to assist Microsoft and the plaintiffs in
reaching agreement on a remedy of some description that Microsoft knew was
inevitable. Even assuming that Microsoft negotiated in utmost good faith in the
course of mediation, it had to have in contemplation the prospect that, were
mediation to fail, the prevailing plaintiffs would propose to the Court a remedy
most to their liking and least likely to be acceptable to Microsoft. Its failure
to anticipate and to prepare to meet such an eventuality gives no reason to
afford it an opportunity to do so now.
These cases have been before the Court, and have occupied much of its
attention, for the past two years, not counting the antecedent proceedings.
Following a full trial Microsoft has been found guilty of antitrust violations,
notwithstanding its protests to this day that it has committed none. The Court
is convinced for several reasons that a final - and appealable - judgment should
be entered quickly. It has also reluctantly come to the conclusion, for the same
reasons, that a structural remedy has become imperative: Microsoft as it is
presently organized and led is unwilling to accept the notion that it broke the
law or accede to an order amending its conduct.
First, despite the Court's Findings of Fact and Conclusions of Law, Microsoft
does not yet concede that any of its business practices violated the Sherman
Act. Microsoft officials have recently been quoted publicly to the effect that
the company has "done nothing wrong" and that it will be vindicated on appeal.
The Court is well aware that there is a substantial body of public opinion, some
of it rational, that holds to a similar view. It is time to put that assertion
to the test. If true, then an appellate tribunal should be given early
opportunity to confirm it as promptly as possible, and to abort any remedial
measures before they have become irreversible as a practical matter.
Second, there is credible evidence in the record to suggest that Microsoft,
convinced of its innocence, continues to do business as it has in the past, and
may yet do to other markets what it has already done in the PC operating system
and browser markets. Microsoft has shown no disposition to voluntarily alter its
business protocol in any significant respect. Indeed, it has announced its
intention to appeal even the imposition of the modest conduct remedies it has
itself proposed as an alternative to the non-structural remedies sought by the
plaintiffs.
Third, Microsoft has proved untrustworthy in the past. In earlier proceedings
in which a preliminary injunction was entered, Microsoft's purported compliance
with that injunction while it was on appeal was illusory and its explanation
disingenuous. If it responds in similar fashion to an injunctive remedy in this
case, the earlier the need for enforcement measures becomes apparent the more
effective they are likely to be.
Finally, the Court believes that extended proceedings on the form a remedy
should take are unlikely to give any significantly greater assurance that it
will be able to identify what might be generally regarded as an optimum remedy.
As has been the case with regard to Microsoft's culpability, opinion as to an
appropriate remedy is sharply divided. There is little chance that those
divergent opinions will be reconciled by anything short of actual experience.
The declarations (and the "offers of proof") from numerous potential witnesses
now before the Court provide some insight as to how its various provisions might
operate, but for the most part they are merely the predictions of purportedly
knowledgeable people as to effects which may or may not ensue if the proposed
final judgment is entered. In its experience the Court has found testimonial
predictions of future events generally less reliable even than testimony as to
historical fact, and cross-examination to be of little use in enhancing or
detracting from their accuracy.
In addition to its substantive objections, the proposed final judgment is
also criticized by Microsoft as being vague and ambiguous. Plaintiffs respond
that, to the extent it may be lacking in detail, it is purposely so to allow
Microsoft itself to propose such detail as will be least disruptive of its
business, failing which plaintiffs will ask the Court to supply it as the need
appears.
Plaintiffs won the case, and for that reason alone have some entitlement to a
remedy of their choice. Moreover, plaintiffs' proposed final judgment is the
collective work product of senior antitrust law enforcement officials of the
United States Department of Justice and the Attorneys General of 19 states, in
conjunction with multiple consultants.(2) These
officials are by reason of office obliged and expected to consider - and to act
in - the public interest; Microsoft is not. The proposed final judgment is
represented to the Court as incorporating provisions employed successfully in
the past, and it appears to the Court to address all the principal objectives of
relief in such cases, namely, to terminate the unlawful conduct, to prevent its
repetition in the future, and to revive competition in the relevant markets.
Microsoft's alternative decree is plainly inadequate in all three respects.
The final judgment proposed by plaintiffs is perhaps more radical than might
have resulted had mediation been successful and terminated in a consent decree.
It is less so than that advocated by four disinterested amici
curiae. It is designed, moreover, to take force in stages, so that the
effects can be gauged while the appeal progresses and before it has been fully
implemented. And, of course, the Court will retain jurisdiction following
appeal, and can modify the judgment as necessary in accordance with instructions
from an appellate court or to accommodate conditions changed with the passage of
time.
It is, therefore, this _____ day of June, 2000,
ORDERED, that the motion of defendant Microsoft Corporation for summary
rejection of the plaintiffs' proposed structural reorganization is denied; and
it is
FURTHER ORDERED, that defendant Microsoft Corporation's "position" as to
future proceedings on the issue of remedy is rejected; and it is
FURTHER ORDERED, that plaintiffs' proposed final judgment, as revised in
accordance with the proceedings of May 24, 2000 and Microsoft's comments
thereon, be entered as a Final Judgment herein.
______________________
Thomas Penfield Jackson
U.S. District
Judge
1. Despite their surprise, compounded no doubt
by the Court's refusal on May 24th to allow discovery and take
testimony on the issue, Microsoft's attorneys were promptly able to tender a
35-page "Offer of Proof," summarizing in detail the testimony 16 witnesses would
give to explain why plaintiffs' proposed remedy, in its entirety, is a bad idea.
Within a week they added seven more.
2. Two states dissented from the imposition of
structural remedies but fully supported the remainder of the relief proposed.
The absence of total unanimity merely confirms the collaborative character of
the process by which the proposed final judgment was formulated.