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  Microsoft Loses Bid To Quash U.S. Suits

By Rajiv Chandrasekaran
Washington Post Staff Writer
Tuesday, September 15, 1998; Page C01

A federal judge rejected Microsoft Corp.'s request to throw out two government antitrust lawsuits against the company, ruling yesterday that enough material facts are in dispute to warrant a trial.

U.S. District Judge Thomas Penfield Jackson yesterday accepted a proposal from lawyers for both sides to postpone the trial until Oct. 15. The courtroom showdown had been scheduled to begin on Sept. 23, but the lawyers said they need more time to conduct pretrial interviews of witnesses.

Microsoft had urged Jackson to dismiss the suits on grounds that government lawyers lack sufficient evidence to prove allegations that Microsoft is violating federal antitrust laws by including Internet "browsing" technology in its Windows 98 operating system software.

But Jackson was unmoved by those arguments. In a 54-page court order, the judge said that preliminary evidence introduced by government lawyers, such as confidential electronic mail between Microsoft executives, has convinced him that the case should go forward.

"The statements of Microsoft executives, when considered in conjunction with other evidence of anticompetitive behavior . . . at least raises a question as to Microsoft's intent to monopolize the browser market," Jackson wrote.

At the same time, Jackson indicated that he still needs to see more evidence before determining whether Microsoft is violating the Sherman Antitrust Act. "Plaintiffs, of course, must prove that Microsoft intended to do more than 'compete vigorously,' " the judge wrote. The suits were filed by the U.S. Department of Justice and 20 state attorneys general.

Jackson did dismiss a portion of the lawsuits filed by the states, rejecting the allegation that Microsoft tried to "leverage" its Windows monopoly to gain a competitive advantage in the browser market. The judge said that several courts have "either rejected the theory [of monopoly leveraging] outright or expressed extreme doubts about its viability."

The judge, however, did let stand a similar allegation made by the Justice Department that does not rest on the leveraging theory. Justice, in its lawsuit, claims that Microsoft "has attempted to monopolize the market for Internet browsers."

Justice Department spokeswoman Gina Talamona said: "We are very pleased with the court's decision and look forward to the upcoming trial."

A Microsoft spokesman said the company was "disappointed" with the ruling. But spokesman Mark Murray said that "today's ruling merely means that the judge wants to review all the facts rather than rule on summary judgment. We're confident that the facts and the law are on our side."

In his ruling yesterday, Jackson found substantial dispute of the facts in three key areas of the government suits:

That Microsoft has illegally "tied" its Internet Explorer browser to Windows 98.

The judge acknowledged that a federal appeals court ruling this summer -- which found that the company did not violate an agreement with the government when it included browsing technology in Windows 95 -- had established a framework determining whether two products are illegally tied or legally integrated.

But Jackson said he needs to see more evidence from both sides before deciding whether the combination of Internet Explorer and Windows 98 violates antitrust laws.

"The court cannot determine whether Windows and IE are 'separate products' until it becomes clear what are the synergistic benefits that are unique to the Windows/IE combination," Jackson wrote. "The court must determine whether Microsoft 'metaphorically bolt[ed] two products together.' "

That Microsoft has prevented computer manufacturers from customizing the first screen a user sees when turning on a Windows-equipped machine. On this issue, Jackson said that "numerous issues remain genuinely in dispute."

That Microsoft has engaged in anticompetitive contracts with Internet service providers and other business partners.

According to a deposition of Microsoft senior executive Brad Silverberg, quoted by Jackson, Microsoft allegedly told AT&T Corp. during negotiations: "You want to be part of the Windows box, you're going to have to do something special for us. . . . If you want that preferential treatment from us . . . we're going to want something very extraordinary from you."

© Copyright 1998 The Washington Post Company

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