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Microsoft, U.S. square off
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September 21, 1999: 6:45 p.m. ET
Counsel for both sides deliver their closing arguments in historic antitrust trial
By Staff Writer John Frederick Moore
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WASHINGTON (CNNfn) - Lawyers for Microsoft and the Federal government squared off in Washington Tuesday, providing their final arguments in an antitrust trial that has pegged the world's biggest software company as a monopolistic predator and the U.S. government as an uneducated meddler in the multibillion-dollar software market.
As the trial inched closer to an end, government lawyers claimed the company's own exhibits and witnesses derailed Microsoft's defense. Microsoft's lawyers fired right back, however, accusing the government of punishing the company for being too successful.
The below-the-belt pot shots from both sides of the courtroom bring to an end one of the longest and most historic trials accusing a U.S. company of monopolizing a particular industry and purposely snuffing out its competition to ensure its dominance.
Emperor with no clothes
Throughout the trial Microsoft has argued that it doesn't hold monopoly power because there is no definable market for computer operating systems. But Stephen Houck, the attorney representing New York State, said the fact that no company has been able to make a dent in Microsoft's Windows dominance for nearly a decade shows that there are significant barriers to entry in that market.
Houck added that one of Microsoft's own witnesses, John Rose, a Compaq Computer Co. executive, considered Windows the only viable operating system. "Microsoft is like the emperor without clothes," Houck said. "No matter how much Microsoft complains that it is not a monopoly, everyone knows it is a monopoly."
Houck also called into question Microsoft Chairman Bill Gates's credibility by pointing out that Microsoft decided not to put him on the stand. "I won't comment on Mr. Gates's credibility, but everyone has seen enough to make their own decisions," Houck said, referring to Gates's videotaped deposition, which had been played intermittently throughout the trial.
Lead Microsoft attorney John Warden contributed to the war of words, repeatedly claiming that the government has failed to prove its case.
"The notion that Microsoft's actions have hurt consumers is an inversion of the truth," he said. "It turns the world on its head."
Long-standing arguments
The Justice Department has argued all along that Microsoft (MSFT) holds monopoly power in the computer operating system market. Microsoft, for its part, has countered that the government has failed to prove any of the major elements of its case, and that its widely used Windows operating system provides consumer benefits.
And Microsoft has argued with equal fervor that it is a tough, but fair, competitor in a highly competitive and ever-changing technology marketplace. Warden accused the government of punishing the firm for being too successful and acting on behalf of other companies that prefer legal action to intense competition.
The trial "is the same as saying, 'Microsoft, you're already too successful, and you have to be handicapped like a horse,' " Warden said. "It's not the government who decides who is better or smarter - that is done by consumers."
Though Microsoft lawyers have long argued that the government is merely acting on behalf of the company's competitors, government attorneys counter that by inhibiting competition, Microsoft harms consumers, as well.
Lead Justice Department attorney David Boies used a Jan. 2, 1997 memo from Microsoft executive James Allchin to illustrate that point.
The government has long claimed that by bundling the Internet Explorer (IE) Web browser with the Windows operating system, Microsoft effectively cut off a competitive threat posed by rival browser maker Netscape Communications Corp. and robbed consumers of choice.
Allchin wrote to another Microsoft executive, Paul Maritz, that tying IE with Windows was "the only thing that makes sense, even if [computer makers] suffer."
"That's as good an illustration as you can get both of Microsoft's monopoly power and its ease of monopoly power to restrict competition," Boies said.
Nonetheless, Warden continued to press the point that Microsoft does not possess monopoly power, despite its 90-percent-plus Windows market share.
"Windows has none of the traditional hallmarks of a monopoly," Warden said. "Why, if independent software vendors write applications only for Windows, does Sun (SUNW) have over 1 million people in its developer community? Why are platform-independent Web-based applications being written in droves? If [computer makers] have no viable alternative to Windows, it's because there is no appreciable consumer demand for other operating systems."
Not over just yet
U.S. District Judge Thomas Penfield Jackson, who will listen to Microsoft's closing arguments later today, likely will deliver his own findings of fact in late October, which should spark another round of settlement talks between Microsoft and government officials, according to experts.
"I would be surprised if there are no discussions," said William Kovacic, a professor at George Washington University Law School. "But the intensity and fruitfulness of the talks will depend on how Jackson writes his findings of fact. He would have to give each side something to worry about."
Later this year, each side will present its proposed conclusions of law, followed by Jackson's final decision.
The Justice Department and 19 states sued Microsoft last year for a broad range of antitrust violations. Most notably, the government claimed Microsoft illegally sought to cut off perceived threats to its alleged Windows monopoly through exclusive contracts and other "predatory" tactics.
Microsoft shares fell 2-15/16 to close at 94-5/8 in Tuesday trade. 
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