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Microsoft CEO Tells Post It's Business as Usual (Post, June 20, 2001)
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Microsoft Ruling
With James Grimaldi
Post Staff writer

Friday, June 29, 2001; 10:15 a.m. EDT

A federal appeals court reversed the breakup of Microsoft Thursday and ordered that a new judge decide the landmark case. It was a major victory for the embattled software maker.

Post Business Investigative reporter James V. Grimaldi has been covering the trial and talks about the latest in the Microsoft ruling.

Submit your questions and comments before or during the discussion.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

washingtonpost.com: Sorry for the inconvenience, we will be starting momentarily.

Alexandria, Va.: Do you think there's a disconnect between AG Ashcroft and the White House on the ruling? Does Ashcroft want to pursue the case while the Bush Administration doesn't?

James Grimaldi: I doubt it, but it is very hard to say at this point. This is an important question. How involved will the White House be in settlement talks, if at all?

Takoma Park, Md.: Isn't this basically a repudiation of Judge Thomas Penfield Jackson and his indiscretions on and off the bench, more than a decision based on legal principles?

James Grimaldi: The court saved its harshest language for Judge Jackson. It is certainly a repudiation of his indiscretions. However, the court found that Jackson was not biased and, time and again in the ruling, deferred to his judgement on factual findings. The court determined on many occassions that he was not "clearly erroneous" in those factual findings.

Rockville, Md.: As a software engineer for a large ISP in Virginia, I have very strong feelings towards the Microsoft breakup. For various reasons, I feel that they should not be broken up and should be allowed to continue their practices as they have always done and many people in my field agree. My position in "the industry" gives me a technical vantage point that the justices do not have. How important do you believe a technical knowledge is in being able to make a wise descision concerning MS's breakup?

James Grimaldi: The Justice Department studied the technical aspects of the company during its development of a remedy. The court of appeals also warned the lower court, which will not take up the remedy, that no "unitary" company had previously been broken up. Previous antitrust breakups involved companies formed through mergers.

Kansas City, Mo.: Mr. Grimaldi:

Was the Court more offended by the fact that Judge Jackson talked with the media about the Microsoft case while it was still pending, or by the specific comments that he made or that were attributed to him?

James Grimaldi: The court seemed more offended by the fact that Jackson spoke with the media. The court did not find that the comments did not reveal bias. The court said: "Although we find no evidence of actual bias, we hold that the actions of the trial judge seriously tainted the proceedings . . . and called into question the integrity of the judicial process."

Kansas City, Mo.: How does Judge Jackson's interviews (his conduct) interfere with the issues of this case? So the reporters get an inside story on how the process works and Judge Jackson decries the lies that belies Microsoft executives - which lies goes to the root of the case to begin with. What harm has been made to the issues of the case? None, except for the fact that the Appeallate judges saw it fit to punish Jackson for his conduct. So going back to my initial question, how did Judge Jackson's conduct alter the issues the appealate court were faced with? And what exactly were the lies that Judge Jackson refered to. American people deserve to know what lies the Microsoft executives said. Thanks.

James Grimaldi: In essence, Jackson's interviews and conduct had no impact on any of the core findings. Indeed, the court said when it reviewed the record that they found no actual bias. Notably, however, the court quoted Judge Learned Hand, who spoke of "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." Ouch.

New York, N.Y.:

Just heard you on 'on the line.' Do you think the court would have made the same decisions if Judge Jackson hadn't talked to the media? Seems more of a pretext to me.

James Grimaldi: OK, I admit it. I was multitasking. That's why this live online got a slow start. I was on WNYC in New York. In answer to your question, probably not. But, boy, were they mad. Remember, Jackson did this once before in the case of Mayor Marion Barry's drug trial. He spoke out then and the very same court of appeals, including now-Chief Judge Harry Edwards, let him have it then too. I personally didn't see anything wrong with him talking to the media. But, of course, I am biased.

Bethesda, Md.: In contrast to one of your posters. I'm also in the technology field and have dealt directly with Microsoft. I know many, many software engineers who feel that Microsoft has been both innovative as well as anti-competitive, and that on balance, it should be required to be much more cautious in how it uses its enormous monopoly power. Microsoft's position that it was not a monopoly was ludicrous on its face, and it's good to see that recognized by the court.

I don't know if a breakup is called for, but there's no doubt that many many technology folks yearn for a kinder, gentler Microsoft.

James Grimaldi: Interesting thoughts. The court echoed some of those thoughts when it discussed the tying standard, that is, when is it illegal to tie one product to a monopoly product. The test the judges articulated was a balance between the good for consumers and the anticompetitive harm. In other words, just because there is some efficiency from the innovation doesn't mean that its anticompetitive effects can be ignored.

Washington, D.C.: In today's article about the ruling, it was mentioned that the decision was per curiam, which the article described as meaning "for the court." The article also said that per curiam decisions are saved for the most important cases and often carry more weight as a result.

However, it is my understanding (I'm an attorney) that per curiam actually means "by the court" (see Black's Law Dictionary) and is usually used for "no brainer" easy decisions, for which no signed opinion is necessary. If the Post were correct, it seems that Brown v. Board of Education, which was unanimous, should have been per curiam, and it was not. I'm not absolutely sure about this but I thought I would write in and ask.

James Grimaldi: The primary decision in Gore vs. Bush (remember that?) was "per curiam," and I don't think that case was a "no brainer." (Although some Democrats think it was brainless. As for me on that, I have no comment.) I only took one year of Latin in high school, so Fr. Puricelli, please forgive me, for I guess I have sinned. I am checking on your claim about Brown v. Board of Education, but I think you might be correct and that the chief justice wrote the decision. In the DC circuit, sometimes per curiam decisions are used when different judges write different parts of the decision. The point, really, is this: It was a powerful, unanimous decision in a court with broad ideological divisions. That means something. It is significant.

New York, N.Y.: Settlement talks. Do you see the States and the Feds agreeing to demands of MSFT? During the trial I recall some disagreements between them.

James Grimaldi: I think it is possible and I really believe they will try. Many people doubt they will come together. I think the disagreements in the trial, which I wrote about quite a bit, were somewhat minor in the grand scheme. They remained pretty well unified throughout and there were no big public brouhahas. That's something given you had a boatload of lawyer-politicians, such as the attorneys general, involved. Think about it for a minute. The fact that they stuck together through enormous pressure is something, and I think that U.S. Attorney General Ashcroft, a former state attorney general from Missouri, will try hard to keep the team together. We'll see.

Washington, D.C.: I'm a freelance writer for a major black publication. We can't seem to get on the media lists for Microsoft and have to rely on white publications to get news about a company that affects us as well.

Could you touch on how Microsoft's monopoly has affected minorities. As you know, Microsoft owns a chunk of BET.com and other Black Entertainment owned products. Microsoft has a suit pending for discrimination and angered many minorities by hiring a "black" lawyer to do his "dirty work." Microsoft rarely has minorities in positions of power so the hiring of this guy is understandably very offensive to many. Please go indepth about the affects of minorities by this monopoly.

James Grimaldi: That's an interesting question. Our reporter, Carrie Johnson, has covered pretty closely the developments in the racial discrimination lawsuit. Steve Ballmer, Microsoft's CEO, was just here at the Post and Carrie asked him about that. He acknowledged that Microsoft could do a lot more to recruit minorities to work at the software giant. I personally cannot think of a single black executive at the company, although I'm sure there are some. Interestingly, however, I wrote a story a year or so ago about some members of the Congressional Black Caucus coming out in support of Microsoft in some ways; that support followed some key donations to the CBC.

Washington, D.C.: If MS and the gov't are able to reach a settlement now, what is it likely to look like? Huge fines? Admission of guilt?

James Grimaldi: Excellent question. Fines haven't been discussed at this point. They came up initially with the filing of the first lawsuit, but haven't mentioned since. No need for admission of guilt; the court of appeals took care of liability yesterday. The questions are: Breakup? Doesn't look likely right now. Conduct remedies? Certainly, but what. How will Microsoft's conduct be limited? Will the company be allowed to bolt new products to the operating system? Will the computer makers be given more flexibility to change Microsoft's operating system software?

Mitchellville, Md.: What other remedies would be appropriate for Microsoft's anticompetitive behavior? Microsoft has stopped a great deal of the behavior stated in the case during the term of the trial, so a mere injunction wouldn't seem appropriate to me. If there is a settlement between Microsoft and the government, what do you think that it would look like?

James Grimaldi: The state attorneys general believe that Microsoft might not have stopped its behavior stated in the case. Indeed, they are looking at whether Microsoft is engaged in the same kind of restrictions and dealing with its new Windows XP software. Is Microsoft again putting up restrictions for competitors to get its software onto the Windows OS? Is Microsoft allowing computer makers to add on rival products? Is the bundling of telephony, instant messaging, audio-video streaming, etc., another attempt to maintain its monopoly?

Fort Myers, Florida: Has anyone stopped to question why MS was only seen as a monopoly by it compettitors until fierce lobbying by them brought the government into play to do what they couldnt. Imagine what would have happened if when IBM dominated the business world in the start up years of the "computer revolution", their (IBM's) compettitors who were losing had the government break IBM up becasue they couldnt compete. Furthermore, has anyone stopped to consider how much more powerful 2 Microsofts will be, the compettitors will have 2 dragons instead of one to fend off.

James Grimaldi: It isn't illegal to be a monopoly. It is illegal to use that monopoly to stifle competition. The court of appeals found that Microsoft had abused its monopoly to protect it. That ruling essentialy vindicates the Justice Department and states' decision to sue. No longer can it be said that this was a case ginned up by the rivals without any basis. Microsoft cannot call the case frivolous and meritless anymore. This unanimous ruling undercuts many of Microsoft's cornerstone arguments.

New York, N.Y.: Settlement talks follow up. The disagreements during the trial might have been minor but there is now a big, significant difference in the ideology of the Justice department and the White house during the trial and now. You see no effect of this difference?

James Grimaldi: Ideology is a funny thing for antitrust. Remember, some very rock-solid, Republican conservative judges were a part of this unanimous opinion, including the Reagan administration's antitrust chief. I think that a big difference probably is that the Justice Department won't push breakup. But they aren't going to abandon this case after winning before this appeals court. And they are boxed into seeking a pretty tough settlement, not a settlement on the cheap, given the severity of the court's findings. Yes, the court said it "drastically" changed the violations. But maintenance of monopoly is a serious violation of the law. Your question is good, but I would not presume to guess precisely how the new administration will get out of this case.

James Grimaldi: Thanks everyone for great discussion. I have to get back to work now. Look for more stories tomorrow and Sunday.

© Copyright 2001 The Washington Post Company


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