Jacksons ruling leaves room for compromise

By Scott Berinato  |  Posted 1999-11-12

The window remains open for Microsoft Corp. and the Justice Department to do what U.S. District Court Judge Thomas Penfield Jackson has pressed them to all along: settle the landmark antitrust case out of court.

On the surface, Jacksons findings of fact that declare Microsoft an abusive monopoly give the prosecution little reason to accept a settlement. But some experts believe theres still a real possibility for the parties to compromise.

Attorneys representing Microsoft and the government are due to meet with the judge next week for a routine scheduling meeting; some observers speculated the sides could use the meeting to discuss settlement options.

With Jacksons harsh findings of fact as a catalyst, Microsoft should be more motivated than ever to settle the suit, observers contend. At Microsofts shareholder meeting this week, Chairman and CEO Bill Gates repeated the companys oft-stated refrain that Microsoft was willing to settle -- as long as it retained the right to add more functionality to Windows and to control the end users "desktop experience."

Olive branch?

"Microsoft is obviously motivated. Theyve done everything to signal their interest in a settlement [short of] setting it as your default screen saver," said Dan Wall, a partner at Latham & Watkins, a law firm in San Francisco. "What will really determine [whether there is a settlement] is if the government offers something that makes it worth it to Microsoft to give up their chances with an appeal."

The governments olive branch? Experts believe it would have to be a deal that mitigates some of the fall-out from Jacksons declaration that Microsoft is a monopoly. The statement paves the way for a parade of potential antitrust suits against the software maker from third parties.

"The findings of fact ... can be used by other lawyers," said Rich Gray, founder and principal of Outside General Counsel of Silicon Valley, in Menlo Park, Calif. "One way to prevent that is in settling a consent decree that would allow Microsoft to avoid that problem."

Lawyers disagree about what such a settlement might entail. Gray believes Microsoft could agree to breaking itself up -- a move that would likely provide its shareholders with handsome profits. On the flip side, he added, a breakup would satisfy the demands of "antitrust purists" that Microsofts monopoly be dissolved.

Anything short of a breakup may not be enough to satisfy the biggest antitrust hawks -- the 19 state attorneys general who, along with the Department of Justice, brought the antitrust suit against Microsoft.

The AGs, encouraged by Jacksons ruling, have hinted at harsh penalties.

"The abuses are serious and far-reaching," said Connecticut Attorney General Richard Blumenthal. "We hope the remedies will be serious and far-reaching."

With the plaintiffs taking such a hard stance, not everyone believes Microsoft will try to settle.

"The odds are at least as good that Microsoft will take its chances in the appeals court," said Stewart Gerson, an antitrust litigator and partner with Epstein Becker and Green in Washington.

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