Microsoft Corporation's stunning setback in its landmark antitrust case means the judge will probably require harsh remedies, but outright breakup of the company is unlikely to be among them, analysts said on Friday. A 207-page opinion released on Friday by US District Judge Thomas Jackson "can only be characterized as a staggering loss for Microsoft" said Mark Schechter, a Washington antitrust lawyer and former top Justice Department official. "This is pretty much everything that the plaintiff had been looking for," said Carl Shapiro, an economist at the University of California, Berkeley, and Justice Department consultant. "This points to a strong remedy and not a slap on the wrist, though there are other strong remedies besides breakup." Jackson's "findings of fact" technically represent only a preliminary opinion, to be made final in a decision and order expected early next year after another round of briefings. But officials on both sides and analysts were already looking ahead to the likelihood of a Jackson order against Microsoft that could be anything from a mild injunction to a radical directive to break up the company. "Technically, he has not found they have violated the antitrust laws," Schechter said. "It's just that the facts are so explicit one can easily read the violation into them." Assistant Attorney General Joel Klein hailed Jackson's opinion as "a tremendous victory for America's consumers," and even Microsoft executives were hard pressed to find any silver linings in the keenly anticipated document. "The findings of fact are more consistent with the government's claims than they are with Microsoft's defences," said Bill Neukom, senior vice president for law for Microsoft, which is based in Redmond, Washington. Neukom said the software giant still hoped to sway the judge in the coming phase of the trial, which focuses on matters of law, but predicted that the final decision would almost certainly be appealed, a process that could last a year or more. A conciliatory-sounding Microsoft Chairman Bill Gates reiterated that the company would be happy to settle the case, but analysts said the one-sided nature of Jackson's findings made a settlement even less likely than before. "If anything, this would tend to make the government more aggressive in its bargaining position," said William Kovacic, a professor of antitrust law at George Washington University who has followed the case closely. "It will increase their sense that (they) are on the verge of a hands-down triumph. That makes it harder for them to walk away with a lighter package of solutions," he said. Further settlement talks were expected, but officials on both sides declined to comment on any continuing negotiations. Legal experts said Jackson was unlikely to seek to break up the company, the radical remedy imposed on Standard Oil in 1911 and agreed to by AT&T Corporation in 1984. "Even a very ambitious judge is likely to find that a sobering prospect and to look for ways to avoid that process," Kovacic said. Instead, experts said, Jackson is likely to demand that Microsoft change its behaviour towards computer manufacturers, removing restrictions on the licensing of the market-dominating Windows operating system. "The judge's findings seem to signal the beginning of aggressive regulatory intervention into the high-tech economy and if so it will go down in history as a colossal mistake," argued Jonathan Zuck, president of the Association for Competitive Technology, a trade group representing small- and medium-sized businesses. "It is impossible for anyone to have a permanent, impenetrable lock in this highly dynamic market, let alone predict the future as Judge Jackson has attempted to do." Criticism of the findings also came from prominent Georgetown University law professor Paul Rothstein, who described the government's case as one "based on competitor lobbying and not on consumer law." "If the government case were to prevail it would set a dangerous precedent for the future interpretation of anti-trust law." The Justice Department argues that Microsoft's decision to bundle its Internet browser Explorer into its market-dominant Windows platform was done to harm rival Netscape, which has developed its own browsing technology. Microsoft contends the decision was taken simply to make it easier for consumers to acquire Web browsing software. |