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Tuesday, 27 February, 2001, 17:34 GMT
Microsoft trial targets judge's 'bias'
Bill Gates and Justice Dept logo
The second day of the Microsoft court hearing has opened with claim and counter claim, as the alleged bias of the judge, who ordered the break-up of the company, came under the spotlight.

District Judge Thomas Penfield Jackson reportedly compared Microsoft founder Bill Gates to Napoleon and said Microsoft executives acted like children.

On Tuesday, the chief judge presiding over the US court of appeals for the District of Columbia voiced anger over these media interviews.

Judges have no right to "go run off our mouths" about cases they're hearing, said the appeal court chief judge Harry Edwards.

"The system would be a sham if all judges went around doing this," he added.

Microsoft said in its appeal that these comments showed that the judge was prejudiced when in June he found the firm guilty of abusing monopoly powers, and ordered the company be split in two.

"What the statements suggest is actual bias," said Microsoft lawyer Richard Urowsky on Tuesday, arguing that this was a reason why the appeals court should overturn Judge Jackson's decision.

'A desire to punish Microsoft'

Earlier in the day, another of Microsoft's lawyers had said that Judge Jackson was driven by a desire to punish the software giant.

"The most draconian aspect of this decree, the break-up of Microsoft, was motivated by a desire to punish Microsoft," said company attorney Steven Holley.

But US justice department lawyer David Frederick hit back, insisting that the evidence was "quite clear" that Microsoft was trying to "strangle a nascent competitor", the rival Netscape browser.

The two-day hearing in the US appeal court was called by Microsoft in an attempt to overturn the ruling by the judge.

On Monday, government lawyers, attempting to persuade appeal judges to uphold the ruling against Microsoft, said the software giant's refusal to allow its Internet Explorer icon to be dropped was evidence of anti-competitive business tactics.

The ruling followed concerns that, by packaging its Internet Explorer browser with its Windows personal computer operating system, Microsoft had unfairly baulked web-only rivals such as Netscape from the market.

'Stifled competition'

Jeffrey Minear, acting for the government and 19 US states, said: "Microsoft's conduct was not simply a series of isolated, unrelated events, but rather a co-ordinated course of anti-competitive conduct.

"And that conduct was directed at maintaining its monopoly power."

But while the government had no objection to Microsoft offering Internet Explorer as part of the Windows package, it had "a problem" with the firm's refusal to allow equipment makers to remove the browser logo, even when Netscape products were installed.

Richard Urowsky, defending Microsoft, said that the firm's licencing agreements had not limited Netscape's ability to gain market share.

Netscape had managed to increase its users from 15 million to 33 million between 1996 and 1998, he said.

"Nothing Microsoft did foreclosed Netscape from any portion of the marketplace," he added.

"Microsoft has some market power and some, some discretion in pricing but that is not equivalent to monopoly power."

'Paranoid monopolist'

The statements came as a seven-strong panel at the US District Court for Appeals for the District of Colombia peppered lawyers with pointed questions about Microsoft's business practice.

Thomas Penfield Jackson
Judge Thomas Penfield Jackson: accused of bias
Judge David Tatel told Microsoft's legal team he "did not see" how Microsoft could get a reversal.

Harry Edwards, the court's chief judge, said the government viewed Microsoft as a "paranoid monopolist, someone who gets up in the middle of the night and shoots at any movement".

Microsoft's prospects

Many lawyers have predicted that Microsoft will achieve at least partial victory in its appeal.

The break-up judgement was so draconian, excessive and rushed that reversal seems assured

Robert McTamaney, antitrust lawyer
"The break-up judgement was so draconian, excessive and rushed that reversal seems assured," said Robert McTamaney, an antitrust specialist with New York law firm Carter, Ledyard & Milburn.

"The remedy is way too severe given the facts of the case," said Nicholas Economides, a New York University professor of economics and an antitrust expert.

But the firm is nonetheless expected to be targeted for some business conduct restrictions.

These could centre on its relationship with major customers, said Ernest Gellhorn, professor of law at George Mason University.

"Microsoft must be willing to allow its customers to put a different icon on the screen," he said

Professor Economides said: "The most likely outcome is that [the appeal court] will find Microsoft liable on some points and then send it back to the district court to discuss a remedy in much greater detail."

Earlier case

The hearing is not the first Microsoft has bought before the US District Court for Appeals for the District of Colombia in an effort to overturn a ruling by Judge Jackson.

A three-judge panel in 1998 overturned an injunction which forbade Microsoft from requiring PC makers to include its internet-browser software with every PC using the Windows operating system.

On Wall Street, analysts were confident on Monday that Microsoft would win considerable reversal in the appeal case.

"We continue to believe that Microsoft will prevail, totally or substantially, on appeal and do not think the company will be broken up," said Christopher Mortenson of Deutsche Banc Alex Brown.

Microsoft shares closed $2.75 higher at $59.50 on Monday.

"The judge had to familiarise himself with computer jargon"
The BBC's business correspondent Patrick O'Connell
"Effectively bullying other companies"
See also:

27 Feb 01 | Business
Inside the Microsoft courtroom
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