Govt case vs. MS looks solid

[John N Bryan <johnb@austin.rr.com>]

San Jose Mercury News
1/9/99

http://www1.sjmercury.com/columnists/gillmor/docs/dg011099.htm

Posted at 5:36 p.m. PST Saturday, January 9, 1999

Government case vs. Microsoft looks solid

Jan. 10, 1999
BY DAN GILLMOR
Mercury News Technology Columnist

EARLY this week, barring the unexpected, the United States, 18 state
governments and the District of Columbia will rest their antitrust case
against Microsoft Corp. The company will then ask U.S. District Judge
Thomas Penfield Jackson to throw out the case. Jackson will say ``no,''
barring the unthinkable, and the company will begin to put on its own
witnesses.

The prosecution's witnesses have held up well under withering, and often
wearisome, cross-examinations by Microsoft's legal pit bulls. But the glue
of the government's case has been in its exhibits. The strongest have been
Microsoft's own words, revealed in internal documents that shine a light on
a remarkable corporate culture.

It's a culture of hard work and superb talent, without a doubt. The talent
shines through in documents that show penetrating strategic insight and
tactical smarts.

You see the hard work when you notice the times on the e-mails, late into
the night and at the crack of dawn. You wonder when they sleep in Redmond,
Wash.

But the culture also radiates contempt. It rejects the norms of behavior
that most of us take for granted. This part of the culture is ugly and
paranoid, like a dictatorship that can survive only as long as it crushes
all dissent. It leads, as the evidence has shown, to predatory behavior
against software companies, bullying of captive PC-manufacturing customers
and even roughhouse antics with its best partners.

The government's other major weapon has been the series of excerpts from
Bill Gates' pre-trial deposition. His deliberate, brazen obtuseness and
avoidance of the most direct questions are bad enough. But if you've seen
any of the excerpts you've gotten a fine view of the sheer contempt this
man holds for anyone who dares to challenge his right to do anything he
pleases. Gates and his apologists wail at the supposed unfairness of it
all. They've insisted that the excerpts aren't relevant. Or, Gates'
behavior is typical of people being deposed. Or, playing of the excerpts is
a government plot to poison public opinion.

Microsoft knows better. The judge knows better, too, if his comments are
any guide.

Despite Gates' dizzying attempts in the deposition to seem unknowledgeable
about his own actions and his company's strategies, the Microsoft chief
executive is widely recognized as one of the most intelligent and hands-on
CEOs in the world. In the real world, no company more purely reflects its
chief executive than Microsoft.

The strength of the government's case has been especially surprising given
the refusal of key victims to testify. The PC manufacturers may loathe
Microsoft and its heavy-handed tactics, but they thrive or wither according
to Microsoft's whims. Their cowardice in declining to testify may be
rational. But it is contemptible. The PC makers should pray the government
wins and gets a satisfactory remedy. Otherwise they'll end up in the worst
position of all, and it will serve them right.

Microsoft did score a few points during the government's case. The
company's best moments came when it showed the errors, if not outright
incompetence, of the companies it sought to crush.

At one point, Jackson noted with acid accuracy to a Sun Microsystems Inc.
executive that Microsoft's version of the Java programming language worked
better than Sun's own version in some respects. Sure, Microsoft's overall
aims were to ruin Java's promise as a potential Windows competitor. But the
company could plausibly claim that it was doing something beneficial for
consumers.

While World Wide Web browsing software has been at the heart of the case,
the defense problem is more generic. Microsoft must find a way to convince
Jackson, or the appeals courts, that it isn't a monopoly. This will be a
huge hurdle.

If Microsoft is found to enjoy a monopoly with its Windows operating
system, as I believe the court will rule, the company inevitably will be
found to have used the monopoly in illegal ways. Only one of those will be
the crushing of Netscape Communications Corp.'s Web-browser business.
Contrary to Microsoft's spin, moreover, the buyout of Netscape by America
Online more reflects Netscape's capitulation to monopolistic tactics than
any competitive threat to the Windows hegeomony.

Microsoft says it behaves no differently than others in the technology
business. This may be true, sadly. But a monopoly isn't allowed to behave
the way a non-dominant company behaves. What's legal for a company on the
way up, however unethical or ugly the behavior may be, often is illegal for
a monopolist.

One of the interesting things about Microsoft's list of witnesses is how
few are from outside the company. This reflects more than just the
company's paranoid and insular nature. It also suggests that it couldn't
find very many credible outsiders willing to defend its behavior, at least
not under oath.

I'm told that the government lawyers, particularly antitrust
litigator-extraordinare David Boies, can barely contain their eagerness to
cross-examine Microsoft's executives and other witnesses. Microsoft's own
arrogance led it to establish an incredibly damaging e-mail ``paper
trail,'' and the government lawyers are undoubtedly salivating as they wait
to undermine the company's witnesses with their own words.

However this case turns out, it has already had one valuable effect. The
world is getting a look inside the technology business, and anyone with a
sense of right and wrong has to be appalled.

Even if this trial fails to come up with an ideal judicial remedy for one
company's predatory excesses, it will shine a valuable light on the
problem. Dictators thrive on secrecy, not just raw power, and good people
must learn about the outrages before they can resist.

Microsoft won't be the last monopoly threat we face, just as it wasn't the
first. But this case remains the most important antitrust action in a
generation, because it will help make the rules for competition in the
Information Age. Stay tuned.
--------------------------------------------------
Dan Gillmor's column appears each Sunday, Tuesday and Friday.
Visit Dan's Web page (www.mercurycenter.com/columnists/gillmor).
Or write him (and please include a daytime phone number -- for
verification, not publication) at the Mercury News, 750 Ridder Park Drive,
San Jose, Calif. 95190; e-mail: dgillmor@sjmercury.com; phone (408) 920-5016;
fax (408) 920-5917.
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John Bryan - johnb@austin.rr.com - http://home.austin.rr.com/johnb/

"The threat to cancel Mac Office 97 is certainly the strongest bargaining
 point we have, as doing so will do a great deal of harm to Apple
immediately."
   --Ben Waldman, Microsoft manager of Macintosh Development, in email
     to Bill Gates and other Microsoft executives.[6/27/97]