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Don't be so sure. While there's no doubt that there are plenty of companies that could mount strong private suits against Microsoft, the software maker may not be facing the avalanche many expect. Why? Because the people with the strongest suits are the least likely to file claims. In contrast, the players with the weakest claims have been the ones that have done the most suing so far. Let's take a quick look at the litigation lineup: America Online: The government's antitrust trial was basically the story of how Microsoft killed Netscape Communications Corp. As the purchaser of Netscape, AOL is entitled to bring what would appear to be almost a slam-dunk private antitrust suit against the software giant. The potential damages in the case are huge: AOL is entitled to be compensated for all of the diminution in Netscape's value attributable to Microsoft -- a sum that could easily reach into the billions (and which, remember, could then be tripled). Sounds like an opportunity AOL can't afford to miss. But there are plenty of people who don't think the suit will ever be filed. Why? For starters, because AOL would have to spend the trial attacking the evils of leveraging -- a strategy it may want to use itself in the future and one that could be key to its long-term vision. "They may have to make arguments against Microsoft that could ultimately be used against them," says Stephen D. Houck, a partner at New York's Reboul, MacMurray, Hewitt, Maynard & Kristol and the lead attorney for the state attorneys general during most of the Microsoft trial. As a result, Houck "would be surprised" if AOL ever files suit. The company has other reasons to hold its fire. During the suit, for example, it would be forced to argue that Netscape's businesses have been decimated by Microsoft. That's the opposite message the company is giving analysts. More important, AOL would be exposed to potential retaliation by Microsoft (or the two parts of a broken up Microsoft), which would still control Windows, Office, and many other important industry platforms. The OEMs: Based upon the evidence presented at the government's antitrust suit, computer makers such as Dell, Compaq, Gateway, IBM, and others probably have a good claim against Microsoft on several grounds: overcharging for Windows, increasing their support costs, and illegally imposing screen restrictions that prevented them from differentiating their products. Problem is, the economic injury from these practices will be hard to prove. For example, it's unclear by how much Microsoft overcharged for Windows. More important, the OEMs would be exposed to retaliation by Microsoft. The software maker could increase the price they pay for Windows, drag its feet answering support questions, and take other actions to make their lives miserable. This is a prospect that terrifies them so much that most of the computer manufacturers never testified against the software maker at the trial. Prediction: The OEMs won't sue Microsoft unless they are absolutely sure the government has imposed a set of restrictions on the software maker that prevents any retaliation. That won't happen until the case is either settled or the appeals process is completed. And even then, they may not take action unless they're sure the restrictions on Microsoft contain no loopholes. Sun: A subplot in the government's antitrust suit was the tale of how Microsoft tried to subvert Java, a set of technologies that Sun Microsystems designed to allow computer applications to run on a wide variety of platforms. The company has already filed a contract suit against Microsoft for this alleged misbehavior -- and now has the potential of adding antitrust claims as well. Unlike the potential antitrust claims that could be filed by AOL and the OEMs, however, this case would require a lot of new work. While the government's antitrust suit mentioned Java, trustbusters did not investigate Microsoft's behavior in this area as deeply as they delved into the issue of the company's war against Netscape's browser. That means that Sun's lawyers would have to do lots of new investigating to bring a claim. Moreover, it's not clear how much money, if any, Sun has lost because of Microsoft's campaign against Java. To the extent that the company's economic damages were speculative, judges could be disinclined to award them. Consumers: They -- or at least the plaintiffs' attorneys who purportedly represent consumers -- are the ones most likely to sue Microsoft. Indeed, there have already been more than 100 consumer class actions filed against the company in both state and federal courts. But these suits are not sure winners. Under federal law, and in most states, it's impossible for an indirect purchaser of a product to file an antitrust suit. And that's just what most consumers are, since they get their operating systems from computer makers. That rule could lead to the majority of the consumer class actions being tossed out. Indeed, an Oregon judge booted a class action out of court on this ground a few weeks ago. The suits that survive this legal challenge could be dangerous. Most likely, these will be in states where indirect purchasers can sue, such as California. In these actions, lawyers are likely to argue that Microsoft has overcharged for Windows by at least $10 a copy -- a sum that could lead to big damages in a large state like California. But once again, it won't be easy to prove the extent of the alleged victims' economic harm. "Consumers are going to have a devil of a time proving how much lower the price of Windows would have been but for the exclusionary conduct, considering part of the government's case was a predatory pricing case," says Mark S. Popofsky, an antitrust partner at Kaye, Scholer, Fierman, Hays & Handler in Washington, D.C., who was a key part of the Justice Dept. team that tried the case against Microsoft. Does all this mean that Microsoft will escape the threat of private litigation? Not at all. There's still a good chance that the company could ultimately have to shell out billions for its allegedly anticompetitive actions. But there's also a chance that this might never happen -- which is something that many commentators who are predicting an economic disaster for Microsoft are missing. 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. |
