IT'S HARD TO imagine how the findings of fact handed down Friday evening by U.S. District Judge Thomas Penfield Jackson could have been worse news for Microsoft or better news for the government's antitrust enforcers. Judge Jackson declared that Microsoft possessed monopoly power in the market for Intel-based personal computer operating systems, and that the company had leveraged this power in ways that harmed competitors and, more important, consumers. While Friday's ruling did not attempt to apply any legal standards to the facts, the conduct Judge Jackson contends now has been proven by the government would, by any reasonable standard, constitute violations of the antitrust laws.
Judge Jackson's ruling seems to us, in the main, a reasonable reading of the evidence -- if one that is sometimes too strident and ungenerous to Microsoft. Indeed, when the record of the case is aptly summarized, it is hard to escape the conclusion that Microsoft's dominant position is threatening to the health of competition in the software industry. Judge Jackson's opinion outlines, first, the evidence that the company controls an operating system monopoly -- chiefly that it can set prices without reference to competitors and that other operating systems control insignificant market share. This monopoly, the judge held, is protected by the number of applications that have been developed for the Windows platform and the inability of any putative competitor to succeed in the market without a similar, preexisting base of applications.
Judge Jackson then proceeded to detail the manner in which that monopoly was employed by Microsoft to stifle perceived threats to the company's dominance. This conduct included efforts to persuade Netscape not to compete for the browser market on Windows. And, the judge concluded that when that effort failed, Microsoft sought to force other companies to support Microsoft's Internet Explorer browsing software -- rather than Netscape's -- as a condition of cooperation from Microsoft that its operating system monopoly make essential for so many companies. Significantly, Judge Jackson found that Microsoft's browser and operating system were distinct products, integrated for the purposes of squelching competitive threats despite the fact that the integration harmed consumers. He also concluded that Microsoft attacked other companies' innovations when it regarded them as potential competitors to Windows as platforms for software development.
Judge Jackson's opinion should send a strong message to the company that it would do well to settle this litigation. The district judge who sits through a long trial is entitled to substantial deference on factual findings. In light of the strength of Judge Jackson's factual findings, that fact alone should jolt the company's resistance to discussing the sort of accommodations that would end the case.