Tag: Microsoft Antitrust Case

Dave Winer Doesn’t Get It Either

Another person misreading the Appeals Court ruling is Dave Winer, but Winer has to go on and make one of his typically loopy suggestions,

Now it seems the next step is for a new trial, and although I’m not a lawyer it seems only reasonable, given the number of violations of antitrust law that Microsoft has been found guilty of, that some protections be put in place immediately to stop Microsoft from doing more harm while the new trial is proceeding.

Let me get this straight. The government needs to conduct a legal proceeding to come up with a more realistic penalty for Microsft, but it should go ahead and institute a penalty before it actually gets around to instituting a penalty.

Besides which, there isn’t going to be another trial. One thing I forgot to add before is that a settlement is also in the Justice Department’s interest. Given the unanimous verdict by the appellate court, any judge named to oversee a new penalty phase is going to be looking over his or her shoulder. There is always the possibility that Microsoft could wind up with a lighter penalty than it might be willing to agree to in a settlement.

Gillmor Doesn’t Get It

Dan Gillmor doesn’t have an e-mail address listed on his site or I’d e-mail him, but I think he and others who are trying to put an anti-MS spin on the Appeals Court ruling just don’t get it.

The court’s treatment of “tying” Internet Explorer to the operating system is surprising, too, in that it doesn’t absolve Microsoft. Instead, the court returned this piece of the case — a crucial one — to the trial court for further consideration.

So the breakup is out. But remedies for anti-competitive behavior are not. And the all-important findings that Microsoft has and abused its monopoly remain intact.

What Microsoft has won is time. It can continue its brutal practices for a while longer, building into Windows and Internet Explorer and Office any and all technologies that will further solidify the monopoly. It can extend its reach into new markets, using its $30 billion in cash (which grows by a billion dollars a month. The company surely figures that it’ll be entirely above the law by the time the law catches up.

Sure, and pigs might fly. First, the Appeals Court outright reversed the finding of fact that Microsoft had attempted to monopolize the browser market. Then it remanded back to a new judge the issue of whether or not integrating IE into the OS was legal or not.

But how is the DOJ going to prove that integration of IE into the Windows OS is violates the antitrust law when the appeals court has already ruled that the reasons outlined by Judge Jackson for concluding so don’t meet an acceptable standard of proof? Is the DOJ just going to pull additional evidence out of its hat? I doubt it. Furthermore, with Jackson off the case and being cited for his improper ex parte communications, a new judge is probably going to give Microsoft a lot more leeway to present their case than Jackson did in his court.

As for the remedies, they’re headed toward Microsoft but what are the odds this case will ever go before another judge? Very, very low. With the Appeals Court making a breakup impossible, Microsoft now has the leverage it needs to reach an advantageous settlement. This is a prospect the Justice Department is going to be very amenable to since it seems clear that John Ashcroft and the rest of the Bush administration don’t want this case.

This whole thing will almost conclude with a slap-on-the-wrist-fine and some meaningless agreement in which Microsoft promises not to enter into exclusionary deals with ISPs and to stop threatening competitors like Intel who want to enter into deals with Microsoft’s competitors.

Meanwhile, the legal coast is essentially as clear as it is ever going to be for Microsoft’s .Net plans for world domination.

Microsoft Makes Government’s Case

The New York Times reports that a senior vice president at Microsoft, Craig Mundie, is going to expand on Jim Allchin’s statement in February about the dangers of open source software. Hasn’t anyone at Microsoft noticed that Mundie and Allchin between them are doing a good job of summarizing the government’s antitrust case against Microsoft?

Look at how the NYT’s John Markoff describes an interview with Mundie,

He cited the history of Unix, which has been replete with incompatible versions. Although he acknowledged that the open-source approach had created new technologies, he said that business models using the open- source community were suspect.

“It is innovation that really drives growth,” Mr. Mundie said, arguing that without the sustained investment made possible by commercial software, real innovation would not be possible.

This is precisely what Netscape and other competitors claim about Microsoft — that it’s embrace and extend model coupled with its willingness to just give software such as Internet Explorer away in order to gain market share is a business model that stifles innovation.

My .02 on the Leon County Hearing — I Just Want David Boies to Lose

Until the other day I didn’t really care who won in Florida, and I still don’t — I just want David Boies to lose. Maybe it’s just me, but I can’t believe the more I watch this sniveling weasel in practice the more my sympathy for Microsoft increases (Boies was the lawyer responsible for the government’s case in the MS antitrust lawsuit). His mini-confrontation with Judge Charles Burton this afternoon really seemed to annoy Judge N. Sanders Sauls.

As for the case itself, Gore’s people can’t have felt good about things when Judge Sauls called Burton — the Bush campaign’s lead witness — “a great American” when he stepped off the stand. After watching how well Burton came across while describing how the Palm Beach County Canvassing Board determined the intent of voters, I would be very surprised if Gore prevailed in this trial.

The best Boies could do was whine that Burton had originally voted against doing a manual recount, only to have Judge Sauls seemingly share in Burton’s reasoning when Sauls seemed perplexed at what justification the Palm Beach County Canavassing Board had for doing a manual recount in the first place.

Slashdotters Just Don’t Get It

The fun folks at Slashdot are enjoying ripping apart a new study of the effects of a Microsoft breakup. The study is published by a group that Microsoft contributes money to and reaches the conclusion that with a Microsoft breakup, the price of Windows would rise as high as $1,000 per license assuming the average price of a computer is $2,000.

I find this to be as absurd as the Slashdotters, but there’s something they seem to be missing — that figure is completely consistent with the government’s own case. The government claimed Microsoft has a monopoly power on Windows and yet several economists, including some publishing in peer reviewed academic journals, estimate the monopoly price for Windows that would maximize profits to be $900. Even an economist testifying for the government at the MS anti-trust trial, Franklin Fisher, conceded that if Microsoft does indeed have a monopoly power it charges far less than the monopoly price for Windows.

One of the things the Slashdotters seem to think is wrong with this price is that obviously a lot fewer people would be willing to buy Windows at $900, but this shows an obvious unfamiliarty with economics since firms rarely are maximize profits by solely maximizing net sales. At $900, obviously, Microsoft might sell far fewer copies of Windows, but it would not need to sell nearly as many copies at $900 as it needs to at say $150 or whatever the average current price of a Windows license is (not that legally the law only requires that the government prove a firm has monopoly power to bring antitrust actions which is a bit like a police officer giving a ticket to a motorist because his car has the ability to go faster than the speed limit, regardless of whether or not the driver is actually going faster than the speed limit).

As the study author readily admits, the real implication of his analysis is that the existing pricing structure of Windows is completely inconsistent with the claim that Microsoft has an OS monopoly.

MS Wins — Supreme Court Won’t Hear Case; Sends Antitrust Appeal to Lower Court

The Supreme Court today decided not to hear the Microsoft case immediately, but rather sent the case to an appeals court to wind its normal way through the judicial system. Bottom line: buy Microsoft ASAP as the stock is going to soar over the next few weeks.

Microsoft is downplaying the impact of the decision, but in reality it’s an enormous victory for the company. The appeals court is very likely to overturn part or even all of the excessive penalty against Microsoft, and whatever the final outcome of the case is it will take years to decide at which point the whole case will be even more irrelevant than it already is today.

(On the other hand, I think MS is going end up committing suicide with their .NET plans so don’t hold on to that stock too long. Disclaimer: if you’re seriously thinking of buying stock based on what I say, you need your head examined. Don’t blame me if .NET succeeds and you’re out a lot of money. Don’t blame me when pigs start flying either.)