|
That has been Microsoft's rallying cry for months now. The worse things have gone for the company in U.S. District Judge Thomas Penfield Jackson's courtroom, the more loudly they've argued that their prospects will improve when the case is kicked upstairs to the District of Columbia Circuit Court of Appeals, and perhaps ultimately to the U.S. Supreme Court. At first glance, there appears to be good reason for this confidence. Both the D.C. Circuit and the U.S. Supreme Court are dominated by known antitrust skeptics, and both have a history of narrowly interpreting the Sherman Act (though there's not a whole lot of recent precedent in the case of the Supreme Court). But the more closely you analyze the company's potential appeal, the weaker it appears to be. Here's why. The basis for Microsoft's confidence about its chances before the Supreme Court and the D.C. Circuit is that both courts contain several jurists who belong to the so-called Chicago school of economics. Some of the true believers include the High Court's Antonin Scalia and Clarence Thomas, and the D.C. Circuit's Stephen F. Williams. In general, these judges believe markets work just fine without government interference. They are also philosophically hostile to the creation of any broad precedent in the Microsoft case that would entitle future judges to meddle in the high-technology industry. GIVING JOY. This philosophy was clearly visible in the D.C. Circuit's 1998 decision on whether Microsoft violated the terms of its 1994 consent decree with the U.S. government. Arguing that the company was illegally forcing computer makers that bought its Windows operating system to also buy its Internet Explorer Web browser, the Justice Dept. in 1997 claimed that Microsoft had violated the consent decree. But the D.C. Circuit didn't buy it, and threw out the government's consent decree suit. In so doing, Judge Williams issued an opinion in which he said, among other things, that "[c]ourts are ill equipped to evaluate the benefits of high-tech product design." These words give joy to the legal team in Redmond. Clearly, the D.C. Circuit doesn't think that judges are competent to make technological decisions and is frightened about giving them any power to do so. The reasons for this sense of judicial humility are clear. Legal precedents are powerful things. They take a long time to undo. And once judges create a precedent, there is no telling what the long-term implications will be. As an example of how far precedents can travel from their original sources, consider the fact that the leading case now being used against Microsoft is the 1954 Supreme Court case U.S. v. United Shoe Machinery Corp. Who knows what havoc a Supreme Court decision approving a breakup of Microsoft could wreak? Because of the D.C. Circuit's consent-decree decision in 1998, many commentators have predicted that Jackson's harsh legal ruling against the company earlier this year will ultimately be at least partially reversed. But increasingly, I'm starting to feel that these commentators are wrong. Why? Because it may be possible for the D.C. Circuit and the Supreme Court to find that Microsoft violated the law without creating a precedent that will open the way for lots of judicial intervention in the high-tech industry. How? By setting a very legal high standard for when a court can find that a technology company broke the Sherman Act and then declaring that Microsoft is a rare case that meets the lofty standard. This approach would work because the factual evidence against Microsoft is unusually strong. To help prove its claims, the government was able to turn to a rare treasure trove of internal e-mail, memorandums, and strategy documents. Even if the D.C. Circuit and the Supreme Court set an extremely high hurdle for antitrust claims against tech companies, it is likely that the Microsoft case could clear it. NO E-MAIL TRAIL. At the same time, I think it's unlikely that this would trigger a series of new government prosecutions against high-tech companies. Why? Because I don't think that we will ever see such strong evidence again. In the wake of the Microsoft case, other high-tech companies have increased their antitrust compliance training and instructed managers to avoid similar types of anticompetitive conduct. And, of course, they are also being trained to avoid leaving an incriminating paper or e-mail trail. As a result, it's possible for the antitrust conservatives on the D.C. Circuit and the Supreme Court to find that Microsoft broke the law, yet at the same time not worry about creating dangerous precedent for judicial intervention in the tech industry. That's just the kind of nice solution the appeals courts are probably looking for. And, barring a settlement, it is just how I think this suit will ultimately turn out. France covers Legal Affairs for Business Week in New York. Have a question or a comment? Let him know at mike_france@ebiz.businessweek.com. |
