New Windows Open on Microsoft
Case
Monday, December 06, 1999
Jonathan Kay
National Post
Richard A. Posner is not your typical U.S. appeals court
judge. He pumps out books as if the business of hearing
cases and writing legal judgments were just a hobby.
And not just dreary legal treatises, either. Since 1981,
when he was appointed to the U.S. Court of Appeals for
the Seventh Circuit, he has published works that deal
with sex, ageing, literature, economics, modern legal
theory and, most recently, the Monica Lewinsky
scandal.
Now he has something new to keep him occupied. Last
week, Judge Posner began mediating the U.S.
government's antitrust action against Microsoft. It's not
his case to decide, of course. Judge Posner is acting
only in a "personal" capacity at the behest of the real
judge, Thomas Penfield Jackson. But Judge Posner
carries so much weight as an expert in both the specific
area of antitrust law, as well as the wider field known as
"law and economics," that he might be able to broker
the long-sought settlement.
Judge Jackson has done his best to set the table for his
colleague. Until recently, Microsoft blew off the
possibility of a settlement. Whenever Bill Gates opened
his mouth on the subject, it was generally to say he
would not compromise the company's ability to
"innovate" -- by which he meant he intended to keep on
programming, configuring, marketing, licensing and
selling Windows products just as he pleased. But on
Nov. 5, Judge Jackson released his "finding of fact," a
sort of pre-judgment teaser that telegraphed to
Microsoft lawyers exactly what kind of final ruling they
might expect. Judge Jackson clearly wanted to scare
Microsoft into a settlement, which would allow all
concerned to avoid the tangled issue of judge-imposed
remedies, not to mention the lengthy two-tiered appeals
process. Microsoft immediately softened up.
The problem now is that Judge Jackson may have gone
too far. Insiders say his finding of fact has so
emboldened the states fighting alongside the government
that some of the states' attorneys-general are
overreaching in their settlement demands. By some
accounts, many of them have their eyes set on the
breaking up of Microsoft.
And this is where Judge Posner comes in. As a
high-profile appeals court judge with name-brand
antitrust credentials, he can speak with authority about
how his colleagues on the D.C. Circuit Court of Appeals
(next in line to hear this case after Judge Jackson) would
treat the case. Judge Posner is considered a conservative
on antitrust issues. In his widely read 1978 classic,
Antitrust law: An economic perspective, he wrote that
antitrust law should be focused on protecting consumers
-- not smaller competitors -- from monopolists. And, as
a judge and scholar, Judge Posner has been a leading
voice in the so-called "Chicago school," which argues
that restrictive practices such as the tied selling of
different products can often enhance consumer welfare.
Thus, although Judge Posner has no authority to impose
a settlement, he can apply his authoritative voice to the
task of disabusing the states of their grander ambitions.
Judge Posner might remind them that, notwithstanding
the scathing tone of Judge Jackson's finding of fact, the
evidence of direct consumer harm -- which Judge
Posner has generally identified in his writings as an
essential component of a compelling antitrust case -- is
quite thin. While there is abundant proof that Microsoft
harmed Netscape and several other corporations with its
monopolistic power, the examples Judge Jackson cites
to demonstrate consumer harm -- that the company
forced computer manufacturers to "ignore" consumer
demand for a browserless version of Windows, for
instance -- are lame by comparison.
For Judge Jackson, Judge Posner's involvement presents
a win-win scenario. If the parties settle, Judge Jackson
can dispose of the case without fuss. If they don't,
Judge Jackson's final judgment will be accorded greater
respect by the D.C. Circuit Court of Appeals, since it
will have been reached grudgingly, despite the best
efforts of an appellate judge many refer to as "the
unofficial 10th member of the Supreme Court."
As for the U.S. Justice Department and the states, they
should not let Judge Posner stand in the way of a fair
settlement. While it may be true that consumers have
not as yet been directly harmed by Microsoft's attempt
to snuff out Netscape -- the alleged wrongdoing at the
heart of the government's suit -- Microsoft's behaviour
does pose a significant threat to consumers in the long
run. The company's actions and public statements
betray a campaign to stifle consumer choice and close
off embryonic technologies that threaten Microsoft's
dream of an all-Windows world. While there is no need
to break up Microsoft, a proper settlement should
ensure that computer manufacturers, Internet service
providers and other industry players are permitted to use
and promote whatever software and new technologies
they please.
Can Judge Posner deliver that kind of settlement? It's
hard to say, because the current negotiations are being
conducted under great secrecy. But all the details will be
made public one day: Judge Posner will probably write a
book about it.