U.S. v. Microsoft Corp., CIV. A. 98-1232(TPJ).

• Decision Date: 07 June 2000
• Docket Number: No. CIV. A. 98-1233(TPJ).,No. CIV. A. 98-1232(TPJ).,CIV. A. 98-1232(TPJ).,CIV. A. 98-1233(TPJ).
• Citation: 97 F.Supp.2d 59
• Parties: UNITED STATES of America, Plaintiff, v. MICROSOFT CORPORATION, Defendant. State of New York, <I>et al.,</I> Plaintiffs, v. Microsoft Corporation, Defendant. Microsoft Corporation, Counterclaim-Plaintiff, v. Eliot Spitzer, Attorney General of the State of New York, in his official capacity, <I>et al.,</I> Counterclaim-Defendants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

97 F.Supp.2d 59

UNITED STATES of America, Plaintiff, v. MICROSOFT CORPORATION, Defendant.

State of New York, et al., Plaintiffs, v. Microsoft Corporation, Defendant.

Microsoft Corporation, Counterclaim-Plaintiff, v. Eliot Spitzer, Attorney General of the State of New York, in his official capacity, et al., Counterclaim-Defendants.

No. CIV. A. 98-1232(TPJ).

No. CIV. A. 98-1233(TPJ).

United States District Court, District of Columbia.

June 7, 2000.

Dennis C. Vacco, Atty. Gen. of State of New York, New York City, Christopher Crook, U.S. Dept. of Justice, San Francisco, CA, A. Douglas Melamed, U.S. Dept. of Justic, Washington, DC, for U.S.

Darryl Andrew Libow, Sullivan & Cromwell, Washington, DC, John Lehman Warden, Sullivan & Cromwell, New York City, for Microsoft Corp.

David Paul Murray, Willkie Farr & Gallagher, Washington, DC, for Bloomberg News, movant.

Donald Manwell Falk, Mayer, Brown & Platt, New York City, for Network Computer, Inc., non-party.

Joseph Jay Simons, Clifford, Chance, Rogers & Wells, LLP, Washington, DC, for Sun Microsystems, Inc., non-party.

Samuel R. Miller, Folger, levin & Kahn, L.L.P., San Francisco, CA, Trisa Jean Thompson, Dell Computer Corp., Round Rock, TX, for Dell Computer Corp., non-party.

Junius Carlisle McElveen, Jr., Jones, Day, Reavis & Pogue, Washington, DC, for International Business Machines Corp., non-party.

John P. Mullen, Anderson & Karrenberg, Salt Lake City, UT, for Novell, Inc., non-party.

Gary M. Cohen, Blumenfeld & Cohen, Washington, DC, for Software and Informantion Industry Ass'n, amicus.

Robert H. Bork, Wahsington, DC, pro se, amicus.

Lawrence Lessig, Berkman Center for Internet & Society, Cambridge, MA, pro se, amicus.

Gene C. Schaerr, Sidley & austin, Washington, DC, William Joseph Kolasky, Jr., Jayant V. Prabhu, Wilmer, Cutler & Pickering, Washington, DC, for Competitive Technology, movant.

Allen Roger Snyder, Hogan & Hartson, L.L.P., Washington, DC, for Netscape Communications Corp., movant.

Lee J. Levin, Levine Sullivan & Koch, LLP, Washington, DC, Niki Kuckes, Miller, Cassidy, Larroca & Lewin, L.L.P., Washington, DC, for Seattle Times, movant.

Lee J. Levin, Levine Sullivan & Koch, LLP, Washington, DC, for ZDTV, LLC, ZDNet, Washington Post Co., Dow Jones & Co., Inc., New York Times Co., American lawyer Media, inc., USA Today, movants.

Lee J. Levin, Jay Ward Brown, Levine Sullivan & Koch, LLP, Washington, DC, for Associated Press, movant.

Robert A. Gutkin, Pillsbury, Madison & Sutro, L.L.P., Washington, DC, for San Jose Mercury News, Inc., movant.

Jerry L. Robinett, New Orleans, LA, pro se, movant.

Richard Joseph Favretto, Mayer, Brown & Platt, New York City, for Oracle Corp., movant.

William Dean Coston, Venable, Baetjer, Howard & Civiletti, L.L.P., Washington, DC, for Compaq Computer Corp., movant.

Benjamin S. Sharp, Perkins, Coie, LLP, Washington, DC, for Boeing Co., movant.

Carl Richard Schenker, Jr., O'Melveny & Myers, L.L.P., Washington, DC, for Bristol Technology Inc., movant.

Robert Stephen Barry, Berry & Leftwich, Washington, DC, for Gravity, Inc., movant.

Joseph Kattan, Jeffrey Thomas Filleran, Gibson, Dunn & Vritcher, L.L.P., Washington, DC, for Intel Corp., movant.

John G. Froemming, Howrey, Simon, Arnold & White, Washington, DC, for Gateway, Inc., movant.

Samuel R. Miller, Folger, Levon & Kahn, L.L.P., San Francisco, CA, for Hewlett-Packard Co., movant.

Roy A. Day, Tarpon Springs, FL, pro se, movant.

W. David Slawson, Los Angeles, CA, pro se, amicus.

Erwin Chemerinsky, Los Angeles, CA, pro se, movant.

Michael John Quinn, Berry & Leftwich, Washington, DC, for California plaintiffs, movant.

Robert E. Litan, Washington, DC, pro se, movant.

J. Black, Washington, DC, for Computer & Communications Industry Ass'n., movant.

Kenneth A. Wasch, Washington, DC, for Software and Information Industry Ass'n, movant.

Carl Lundgren, Valmarpo Antitrust, Upper Marlboro, MD, for Valmarpo Antitrust, movant.

MEMORANDUM AND ORDER

JACKSON, District Judge.

These cases are before the Court for disposition of the sole matter presently remaining for decision by the trial court, namely, entry of appropriate relief for the violations of the Sherman Act, §§ 1 and 2, and various state laws committed by the defendant Microsoft Corporation as found by Court in accordance with its Findings of Fact and Conclusions of Law. Final judgment will be entered contemporaneously herewith. No further proceedings will be required.

The Court has been presented by plaintiffs with a proposed form of final judgment that would mandate both conduct modification and structural reorganization by the defendant when fully implemented. Microsoft has responded with a motion for summary rejection of structural reorganization and a request for months of additional time to oppose the relief sought in all other respects. Microsoft claims, in effect, to have been surprised by the "draconian" and "unprecedented" remedy the plaintiffs recommend. What it proposes is yet another round of discovery, to be followed by a second trial—in essence an ex post and de facto bifurcation of the case already considered and rejected by the Court.

Microsoft's profession of surprise is not credible.¹ From the inception of this case Microsoft knew, from well-established Supreme Court precedents dating from the beginning of the last century, that a mandated divestiture was a possibility, if not a probability, in the event of an adverse result at trial. At the conclusion of the trial the Court's Findings of Fact gave clear warning to Microsoft that the result would likely be adverse, yet the Court delayed entry of its Conclusions of Law for five months, and enlisted the services of a distinguished mediator, to assist Microsoft and the plaintiffs in reaching agreement on a remedy of some description that Microsoft knew was inevitable. Even assuming that Microsoft negotiated in utmost good faith in the course of mediation, it had to have in contemplation the prospect that, were mediation to fail, the prevailing plaintiffs would propose to the Court a remedy most to their liking and least likely to be acceptable to Microsoft. Its failure to anticipate and to prepare to meet such an eventuality gives no reason to afford it an opportunity to do so now.

These cases have been before the Court, and have occupied much of its attention, for the past two years, not counting the antecedent proceedings. Following a full trial Microsoft has been found guilty of antitrust violations, notwithstanding its protests to this day that it has committed none. The Court is convinced for several reasons that a final—and appealable —judgment should be entered quickly. It has also reluctantly come to the conclusion, for the same reasons, that a structural remedy has become imperative: Microsoft as it is presently organized and led is unwilling to accept the notion that it broke the law or accede to an order amending its conduct.

First, despite the Court's Findings of Fact and Conclusions of Law, Microsoft does not yet concede that any of its business practices violated the Sherman Act. Microsoft officials have recently been quoted publicly to the effect that the company has "done nothing wrong" and that it will be vindicated on appeal. The Court is well aware that there is a substantial body of public opinion, some of it rational, that holds to a similar view. It is time to put that assertion to the test. If true, then an appellate tribunal should be given early opportunity to confirm it as promptly as possible, and to abort any remedial measures before they have become irreversible as a practical matter.

Second, there is credible evidence in the record to suggest that Microsoft, convinced of its innocence, continues to do business as it has in the past, and may yet do to other markets what it has already done in the PC operating system and browser markets. Microsoft has shown no disposition to voluntarily alter its business protocol in any significant respect. Indeed, it has announced its intention to appeal even the imposition of the modest conduct remedies it has itself proposed as an alternative to the non-structural remedies sought by the plaintiffs.

Third, Microsoft has proved untrustworthy in the past. In earlier proceedings in which a preliminary injunction was entered, Microsoft's purported compliance with that injunction while it was on appeal was illusory and its explanation disingenuous. If it responds in similar fashion to an injunctive remedy in this case, the earlier the need for enforcement measures becomes apparent the more effective they are likely to be.

Finally, the Court believes that extended proceedings on the form a remedy should take are unlikely to give any significantly greater assurance that it will be able to identify what might be generally regarded as an optimum remedy. As has been the case with regard to Microsoft's culpability, opinion as to an appropriate remedy is sharply divided. There is little chance that those divergent opinions will be reconciled by anything short of actual experience. The declarations (and the "offers of proof") from numerous potential witnesses now before the Court provide some insight as to how its various provisions might operate, but for the most part they are merely the predictions of purportedly knowledgeable people as to effects which may or may not ensue if the proposed final judgment is entered. In its experience the Court has found testimonial predictions of future events generally less reliable even than testimony as to historical fact, and cross-examination to be of little use in enhancing or detracting from their accuracy.

In addition to its substantive objections, the proposed final judgment is also criticized by Microsoft as being vague and ambiguous. Plaintiffs respond that, to the extent it may be lacking in detail, it is purposely so to allow Microsoft itself to propose such detail as will be least disruptive of its business,...