Judgment day looms for Microsoft

It may be the technology trial of the century, but for most people, Microsoft versus the US Department of Justice is - outside of some occasionally blistering exchanges and, on Microsoft's side, some embarrassingly botched video "evidence" - about as exciting as reading a Windows programming manual.

Partly, that may be because Microsoft has learned a lesson on the perils of hubris. In the hearings just over a year ago to determine whether Microsoft could legally bundle its Internet browser software, Internet Explorer (IE), with its Windows operating system, Microsoft was so consistently arrogant, flippant and condescending in and out of court that the company managed to outrage even the most mild-mannered of computer users.

In the United States, where the software titan's initial legal flurry was given massive coverage, the public swung away from the company in disgust. Bewildered Microsoft employees at the company's home base in Redmond, Washington, long accustomed to being viewed locally as the quick-witted carnivores at the top of the technology-job food chain, reported chagrin at being treated like bottom-feeding pariahs. Whatever lustre the company once had (it consistently has come top of the heap as the firm Americans most admire) was seriously tarnished within a few weeks.

Eventually, the message sank in, and Microsoft changed its legal team and toned down the rhetoric in preparation for what may well be the fight for its life. Certainly that makes for less entertainment but it also makes it harder to gauge where Microsoft is going with its defence. As the trial enters its 16th week in Judge Thomas Penfield Jackson's windowless courtroom in Washington DC, and Microsoft reaches the halfway point in its own presentation of evidence, nobody has any clearer idea of where this trial may end up.

On the one hand, the Department of Justice has offered up scalding evidence - Microsoft chairman Bill Gates's own testimony and e-mails being amongst the most potentially damaging - that the software company routinely engaged in strong-arm tactics to try to flatten competition and control various markets. On the other hand, many of the witnesses - top-ranking executives of other technology companies - haven't given particularly admirable accounts of their own actions, and have failed to make clear that Microsoft was necessarily doing anything they themselves wouldn't have done in the voracious, fast-changing technology marketplace.

At the heart of the trial is a deceptively simple question based upon the central piece of US antitrust law, the Sherman Act. This was created in 1890, at the time of the great "robber baron" entrepreneurs, to prevent any one company from gaining such might that it could force out competition and achieve a stranglehold on a market as well as on peripheral, related markets.

The Department of Justice, the US branch of government charged with enforcing the act, has determined that persuasive evidence exists that Microsoft has violated the act by illegally gaining control of the computer operating system market, and then, used that control to try to dominate a peripheral market, that of Internet browser software. The DOJ team, headed by a tough, hired gun private lawyer, Mr David Boies, is now trying to prove that this is so.

Perhaps the most misunderstood aspect of the trial is the notion of a monopoly. Few people (mainly, just disingenuous Microsoft executives) dispute that Microsoft holds an operating system monopoly - some 90 per cent of the world's computers run on some version of Windows. Under US law, it is not illegal for a single company to be a recognised monopoly in its market - legal questions arise only if that monopoly was gained through what the law defines as underhanded means.

Mr Boies has hammered away at Microsoft witnesses and produced many technology kingpins to try and demonstrate that Microsoft illegally steamrollered its way to the top, then used its 90 per cent control of computer "desktops" - the screen you see when your computer starts up - to give its browser, Internet Explorer (IE), a leg up on the former leader, Netscape's browser Navigator. A range of "deals", many of which the DOJ is arguing were more like pronouncements from a dictator than negotiated arrangements, gave IE pride of place on the desktop and banished Navigator.

Microsoft's defence has been consistent, based on two premises: first, that its practices were entirely legal and second, that such practices actually are necessary within the withering pace of the technology industry.

Microsoft has pointed to mammoth mergers and deals, like the one between Netscape, America Online and Sun which occurred mid-trial, and insisted the high-tech playing field changes so quickly that at any moment, unforeseen rivals could displace Microsoft.

But overall, commentators seem to feel that the DOJ has the upper hand. Microsoft has suffered enormous blows to its credibility by releasing three bungled videos which made their evidence appear rigged and made the company look like technological amateurs. Several other company heads have claimed Microsoft forced them into making pro-IE, anti-Netscape deals. Internal Microsoft emails have implied a number of questionable practices took place, even to the juvenile extent of adding "logic bombs" to Microsoft software products to make them disable competing products.

Microsoft, for its part, has claimed the e-mails represent private company bravado and banter, not policy. Companies have misunderstood the nature of their overtures, says Microsoft, or agreed to the deals because they recognised Microsoft had the better product. However, many commentators have pointed to the telling fact that, of the 12 witnesses each side is allowed to call, Microsoft can only find three non-Microsoft employees willing to testify on its behalf. They even had to hastily discard one university professor witness when his testimony started helping the prosecution.

As the trial winds up - Judge Jackson has stated that he wishes Microsoft to conclude its testimony by the end of February, at which point he will call a break of perhaps a month before returning to final arguments and deliberations in April - no one knows which way the judge will rule. To date, he has been somewhat hostile and short-tempered with Microsoft.

His choices, should he find against Microsoft, are limited. He could require that the company be closely monitored - an option analysts think is unlikely since it requires ongoing surveillance - or Microsoft could be restructured. One suggestion is to split it into a number of "Baby Bills" - smaller companies, each of which would be entitled to Microsoft's intellectual property. (The name comes from the "Baby Bells" which resulted after telecommunications giant AT&T was snipped up following another antitrust suit.)

Or, the company could be divided in two - into a company focused on the Windows operating system and one which would produce applications like Word, Office, Excel, and products like the Encarta encyclopedia.

Another option touted by programmers in particular would be to release the source code for Windows - the actual digital building blocks of the program, which would enable anyone to create products for it or modify it. Critics argue that the fast-changing technology industry has already begun to race ahead of any solutions targeted at the specific issues of the trial.

And that is what is really at the heart of this trial - the question of whether old-industry tactics can possibly be used to regulate this brave-new-world industry. Because both the questions and the potential answers are so mind-bogglingly wide-ranging, we can expect the trial to get very interesting indeed as it draws to a conclusion.

A range of Websites are tracking the Microsoft trial in detail. Try: C/Net's News.com; http://www.news.com/SpecialFeatures/

0,5,27528,00. html Wired News; http://www.wired.com/news/news/ antitrust/ CNN's searchable Gates video testimony; http://www.cnn.com/TECH/computing/ video/gates/