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  Experts: Harsh Portrayal of Microsoft Poses Risks

By David Segal
Washington Post Staff Writer
Wednesday, October 21, 1998; Page A12

In the first two days of its assault on Microsoft Corp., the Justice Department has signaled its strategy for the rest of the trial: Cast the company as a bullying monopolist led by a cutthroat and dishonest CEO.

It's an eye-catching argument, and Justice's lead attorney, David Boies, buttressed it with a rhetorical onslaught Monday that included video snippets and e-mails from Microsoft's chairman, Bill Gates.

But antitrust lawyers and scholars said yesterday that the government's legal strategy is far from a slam dunk. Antitrust law, they say, is notoriously fuzzy and open to a variety of interpretations, and this landmark case features just about every variable in the book.

That makes painting the software giant as a ruthless company-killer extremely tricky, legal experts say, because one judge's corporate predator is another's robust competitor.

"There are no strict answers here," said Mary Lou Steptoe, an antitrust lawyer at Skadden, Arps, Slate, Meagher & Flom. "You have to look at the overall market context, you have to look at the definition of the market being monopolized and then what exact action was taken. And you must look at probable effect."

Even the legality of Microsoft's alleged threats against rivals are grist for debate among legal scholars. One of those threats was spotlighted Monday in the written testimony of James L. Barksdale, CEO of Netscape, maker of a Web browser that competes against a Microsoft product.

"I have never been in a meeting in my 33-year business career in which a competitor had so blatantly implied that we should either stop competing with it or the competitor would kill us," Barksdale wrote.

Such threats might be considered brutal, but whether they violate antitrust law is another matter, said Charles James, a former Justice Department antitrust enforcer now in private practice. The real issue, he said, is whether Microsoft followed through on its threats.

"If all that transpired after Netscape's refusal was honest competition, then all you've got is honest competition," James said. "Motive alone doesn't get you there."

Another tricky variable: the effect on consumers of Microsoft's alleged actions. It isn't enough for Justice to simply prove that Microsoft is a bad actor – it must also prove that the company's actions harmed software users and Web surfers, said Georgetown Law Center professor Steve Salop.

That would require showing that consumers are paying more for a product than they otherwise would, are getting inferior products or aren't able to get products that otherwise would have been available, he said.

"The question isn't whether the threats sounded bad, but what they meant for consumers," Salop said.

To some experts, the government's most damaging evidence hinges on Microsoft's alleged efforts to cajole rivals to collude. Boies produced notes of a meeting in which Netscape senior executive Marc Andreessen described a Microsoft offer: "Would you be interested in having a partnership where NS [Netscape] gets all the non-Win 95 stuff and MS [Microsoft] gets all the Win 95 stuff. . . ."

"Saying to Netscape, 'Hey, we're going to take your head off' isn't by itself illegal," said William Kovacic, an antitrust professor at George Washington University. "But add in 'Hey Netscape, let's divide the universe and if you don't agree, we'll bury,' that's a problem. This is the most dangerous part of the suit for Microsoft."

Some experts were surprised that the government opened its case with a personal attack on Gates, juxtaposing his videotaped deposition with internal e-mails he had sent to Microsoft executives. In the videotape, Gates said he first heard about a meeting with Netscape through a newspaper report. In the e-mail, the meeting appears to be his idea.

Microsoft's attorneys said in court yesterday that those comments were taken out of context. But the government's attack on Gates left disinterested parties scratching their heads. After all, "being a bad guy is not the same as violating Section 2 of the Sherman Antitrust Act," said Joe Sims, a Washington antitrust lawyer.

Other lawyers said Justice had little choice but to ratchet up the rhetorical heat because it is likely to seek remedies that go far beyond the "don't do it again" order judges typically impose on companies that have been found to strong-arm competitors. Justice attorneys have said if they win they will seek sanctions that address the company's fundamental business practices, possibly forcing Microsoft to share technical details of Windows-related software.

To justify such draconian measures, said former FTC lawyer Marc Schildkraut, the government must show that Microsoft is a particularly brutal company and committed sins that go well beyond exploiting its market power to bundle its browser with its market-dominating operating software. The attack on Gates's credibility must be understood in that context.

"There is a method to this apparent madness," he said.

There is no standard playbook in this case, Sims added, because it has been decades since a trial has been completed in a monopoly case brought by the government. Cases against AT&T and IBM were resolved before a trial ended.

"Nobody in that room has ever been in this kind of case before," Sims said.

© Copyright 1998 The Washington Post Company

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