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"The judge had to familiarise himself with computer jargon"
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The BBC's business correspondent Patrick O'Connell
"Effectively bullying other companies"
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Tuesday, 27 February, 2001, 21:39 GMT
Court questions Microsoft break-up
Bill Gates and Justice Dept logo
US government lawyers came in for a second day of tough questioning on Tuesday, as an appeal court debated whether or not Microsoft had abused its monopoly power.

One appeal judge, David Sentelle, told the court that "there isn't any adequate finding that there was an attempted monopolisation".

"If there isn't a proper finding," he added, "then we would have to at least send this back for some trial judge to weigh the facts".

The seven judge panel also pressed the US Justice Department on whether dividing Microsoft would truly promote competition and why there had been no full hearing on the split.

The most draconian aspect of this decree, the break-up of Microsoft, was motivated by a desire to punish Microsoft

Steven Holley, Microsoft Attorney

Steven Holley, a lawyer for Microsoft, claimed that the software giant had never had a full chance to provide all the facts.

He said Judge Thomas Penfield Jackson, who ordered the break-up of the company, went too quickly from the hearing phase to a ruling.

Mr Holley also said that splitting the company in two was "entirely out of proportion" to whatever anti-trust violations were found.

US government lawyers retaliated, arguing that Microsoft had abused its monopoly position in the market, by packaging its Internet Explorer browser with its Windows personal computer operating system.

"The evidence underlying the findings on this point are quite clear," said government attorney David Frederick.

Judge's alleged 'bias'

The alleged bias of Judge Jackson and interviews he gave to the media also came under the spotlight on Tuesday.

Thomas Penfield Jackson
Judge Thomas Penfield Jackson: accused of bias

The judge reportedly compared Microsoft founder Bill Gates to Napoleon and said Microsoft executives acted like children.

In the second day of the hearing, 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, arguing that this was a reason why the appeals court should overturn Judge Jackson's decision.

Although Mr Urowsky later conceded that even if Judge Jackson's comments did not indicate bias, they "could have been misinterpreted by a reasonable person".

'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.

'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."

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.

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See also:

27 Feb 01 | Business
Inside the Microsoft courtroom
26 Feb 01 | Business
Microsoft appeals against split
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