"Silicon Valley is cautiously cheering," California Attorney General Bill Lockyer announced after Judge Thomas Penfield Jackson voted thumbs down on Microsoft Corp. this afternoon.
But it wasn't nearly as simple as that. First of all, Microsoft's foes--and in this booming high-technology haven they're as plentiful as BMWs--weren't being cautious about anything. From their anonymous cubicles in their bland industrial parks, they practically shouted their glee.
"We're very happy," said Michael Morris, general counsel of Sun Microsystems Inc. "I found myself thinking of that famous statement by President Reagan: 'Facts are stubborn things.' I think Microsoft will find these facts stubborn indeed."
Venture capitalist Tim Draper, however, wasn't pleased at all. "Silicon Valley should be furious with the way our government is treating successful companies," he said. "Any would-be entrepreneur is getting a message from Washington that says: 'Become successful but not too successful, or we'll ruin your life.' "
Draper, who has both made deals with Microsoft and competed with it, added: "Bill Gates is a hero, not a villain. Microsoft is the goal we all aspire to be."
Venture capitalist Jay Freidrichs of Cypress Growth Fund agreed: "My gut is, this is not positive for the industry. The less government involvement, the better."
Cheering, grimacing--it all depended where you were coming from. "I feel very vindicated and very happy," said James Barksdale, former head of the browser company Netscape Communications Corp. and a key government witness in the case. The judge agreed with the government that Microsoft used its monopoly powers to crush Netscape, which was purchased by Dulles-based America Online Inc. earlier this year.
"I don't think Microsoft is evil. I think they just got carried away," Barksdale magnanimously added. "Practices that served them well when they were young and growing and aggressive are illegal once you become a monopoly."
Opinion wasn't only split on the merits of the case. No one seemed quite sure what would happen next. "We don't know what the remedies are. I think convicting them was the easy part," said Roger Kay, an analyst for International Data Corp.
Morris, the Sun lawyer, argued that no matter how long the case takes, "having a federal district court render findings like these is bound to affect the atmosphere.
"A couple of years ago, Microsoft was regarded as this inexorable force. There was so much fear," Morris added. "Companies didn't develop products they would have otherwise developed, or they sold out early to Microsoft, or they refused to work with other companies if they thought Microsoft was going to be angry. This opinion will create an atmosphere in which companies will feel they can operate much more independently of Microsoft, and that's bound to benefit consumers."
Robert F. Young, chief executive of Durham, N.C.-based Red Hat Inc., which distributes an increasingly popular operating system called Linux that competes with Microsoft's Windows, said there have already been changes because of the mere existence of the trial. "It created a policeman in the marketplace," he said. "It is causing Microsoft and others to behave much better."
George Vradenburg, senior vice president at AOL, said, "The critical issue now is how to structure a speedy and effective remedy that protects consumers, increases competition and innovation and, importantly, prevents Microsoft from maintaining or using its monopoly power in the future."
The first real-world effect of the findings is likely to be when the stock market reopens Monday.
"Stocks that trade at more than 20 times revenues, as Microsoft does, are vulnerable to bad news," said Peter Ausnit, who follows Microsoft for the San Francisco brokerage Volpe Brown Whelan & Co. "And this is devastating. He's [the judge] done everything but label the company 'evil.' "
Many high-tech folks were simply mute. In Silicon Valley, where tomorrow you may suddenly be doing business with your worst enemies--and the day after that, forming a new company with them--most people just didn't want to comment.
Cisco Systems Inc., the highflying maker of Internet infrastructure, said it would be "inappropriate." Intel Corp. spokesman Chuck Mulloy said only that the company would "maintain our neutrality."
But even some of those with more direct involvement in the case were mum. Netscape co-founder Marc Andreessen, who once compared Microsoft to the Mafia, declined to comment. Andreessen, who is now running his own start-up here, gave no reason.
Ausnit wondered if the judge's findings could "open up Microsoft to thousands of lawsuits from every belly-up software firm in the world. . . . Are they going to be set upon like the cigarette industry?"
He seemed to think so, and said he would spend the weekend reevaluating his "buy" recommendation on Microsoft stock.
Staff writers Ariana Eunjung Cha, Shannon Henry and John Schwartz contributed to this report.