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RealTime IT News

Time for Deal in US vs. Microsoft

After more than five months of grueling court room action, the Microsoft antitrust trial enters a six-week recess. What better time, say legal experts, for the combatants to forge a settlement.

"The trial has gone very poorly for Microsoft, and the sharks will start circling the longer this process goes on," said Richard Gray, a partner with Bergeson, Eliopoulos, Grady & Gray in San Jose, Calif.

But for Microsoft to come to the negotiating table, the government must be reasonable, according to Rick Rule, head of Covington & Burling's antitrust practice in Washington, D.C., and a legal consultant to Microsoft.

"Microsoft has always desired to bring an end to the trial and to re-focus on the marketplace. The ball is in the government's court," said Rule.

According to Rule, previous settlement talks broke down last May because of what he termed "absurd" government demands, such as a requirement that Microsoft ship Netscape's Navigator browser with Windows at no charge.

At this point, both sides appear unwilling to concede an advantage to their opponent.

Despite an apparent rout in the court room in recent weeks, Rule says federal anti-trust law supports Microsoft, and media reports of the trial's progress have been misleading.

"When you lay the entire record against the relevant law, it will work to Microsoft's advantage," said Rule. "There's been a lot of heat and light, but the government hasn't proven a number of the elements that are critical to its prevailing in the case."

Gray agreed that it's impossible to predict a trial's outcome based on a judge's court room facial expressions or utterances. Furthermore, Gray said Justice's attorneys made several serious gaffes of their own early in the trial, such as failing to disclose a key piece of evidence -- a letter the government received from Netscape's attorneys prior to the now infamous June, 1995 meeting between Microsoft and Netscape, at which Justice alleges that Microsoft offered to divide the browser market.

"If I did that in federal court to a federal judge, I'd get my head handed to me," said Gray, who noted that Judge Jackson could still decide to throw out all of the government's evidence related to the June 1995 meeting if he determines the US did not perform its discovery in good faith.

Still, Gray believes Microsoft's defense is in serious trouble, and Justice has forcefully proved that the firm illegally tried to protect its monopoly in operating systems. According to Gray, "There have been several instances when things went very poorly for specific Microsoft witnesses who had very important jobs to do, and as a result their jobs remain undone."

The government has been less successful, Gray believes, in proving its claim that Microsoft has attempted to monopolize the browser market. "The union of AOL and Netscape makes it difficult to accept that the browser market could be monopolized," said Gray, "so I don't see how the judge could find that Microsoft attempted to monopolize it."

Should a settlement elude the parties and the court rule in the government's favor, Gray said its case isn't strong enough to support what he called the "death penalty" remedies the US is said to be considering. Among them are breaking the corporation up in "Baby Bills," and forcing Microsoft to license its technology to competitors.

"I don't think there's enough in this record to support that level of draconian remedy," said Gray.

A more likely outcome in the event of a government victory is a requirement that Microsoft enable consumers to substitute a browser in place of Internet Explorer. The court could also dictate that Microsoft establish an oversight to ensure future compliance with anti-trust laws, according to Gray.

Rule fears thatthe trial may have emboldened Justice to feel that it should have an active role in how technology is created, a development he believes would be disastrous for more than Microsoft.

"The real harm that this case could do is not just to Microsoft, but it could create a goal for the government that could well have a deleterious effect throughout the industry," said Rule.

The landmark trial is expected to resume in April at the soonest. The rebuttal phase is not likely to produce any startling new facts -- but it could generate new drama, especially if Microsoft calls its CEO Bill Gates to the stand. So far, the company has not ruled out that possibility.

For the complete RealAudio debate between Rick Rule and Richard Gray, click here.