A QUICK INJUNCTION: "DECISIVE BATTLE" IN THE MICROSOFT WAR?

Edited by Douglas Harbrecht

Arguing that the release of Windows 98 will cause "irreparable harm" to consumers, the Justice Dept. wants to slap a quick injunction on Microsoft that would force the company to adhere to new ground rules. The injunction, says the government, would stop Microsoft from bullying rivals and business partners without halting the shipment of Win98.

On May 22, U.S. District Judge Thomas Penfield Jackson has scheduled a meeting to set a date for the injunction hearing -- a confrontation that could very well determine who ultimately wins this showdown. "It will be a decisive battle," says George Mason University School of Law Professor William E. Kovacic. "If the Department of Justice wins, it will give tremendous leverage to their case. If the DOJ loses, they will be forced to march through the litigation swamp that tends to eat government lawyers alive."

The Justice Dept. and the coalition of state attorneys general that are suing Microsoft want Jackson to impose an injunction before June 25 -- the day that Windows 98 is scheduled to be sold in stores. But it's unclear if the judge will be able to act that swiftly. He has to give Microsoft time to answer the government's charges and to review what evidence will be used against the company. Then Jackson has to hold a hearing, after which he has to weigh the evidence and issue a ruling. According to New York City antitrust attorney Stephen M. Axxin, this process would ordinarily take 60 days at a minimum, much too long to beat the Windows 98 rollout.

According to court papers, the government plans to ask Jackson to prohibit Microsoft from striking deals with computer makers, Internet service providers, and Internet content providers that prohibit them from promoting the browser sold by Microsoft's chief competitor, Netscape Communications Corp. Second, it wants to give PC manufacturers more power to control the first screen users see when they turn on their computer, rather than Microsoft's own screen, which features the company's Internet content sites. Finally, it hopes to force Microsoft either to sell its Internet browser separately from Windows 98, or to include Netscape's rival product in the operating system.

To prevail, the Justice Dept. and state AGs will have to prove that they have a "substantial likelihood of winning" the case, and that allowing Microsoft to sell Windows 98 will cause irreversible injury to consumers. Normally, that's a tough standard for the government to meet -- much harder than the legal standards that would be applied ultimately in trial. But in this case, the trustbusters have cause for hope. Judge Jackson has already shown a willingness to hit Microsoft with an injunction. In December, he ordered the company to stop requiring PC makers to take its browser as a condition of licensing Windows 95. "Justice does have a thumb on the scale, and it's Judge Jackson," says Ernest Gellhorn, an antitrust professor at George Mason.

Imposing an injunction in this case could be tougher than in the Windows 95 suit, however. Last year, Jackson was only asked to interpret the meaning of a contract: the 1994 consent decree struck between the Justice Dept. and Microsoft. This time he'll have to evaluate the merits of the government's underlying charges -- a much more complex task.

According to several antitrust experts, it's likely that Jackson will compromise by approving some, but not all, of the government's proposed remedies. If the Judge takes this path, says New York University antitrust expert Eleanor Fox, it's most likely he would crack down on Microsoft's contractual practices. Of all Microsoft's allegedly anticompetitive acts, they are considered the most vulnerable to government attack, Fox says. And unlike forcing Microsoft to bundle Netscape's browser into Windows 98, this remedy wouldn't be unreasonably disruptive to the market. "There's little cost to enjoining [the contracts]," Fox says. In contrast, "asking a judge to force Microsoft to carry the Netscape browser is a harder thing to do."

By Mike France in New York