By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
With the appeals court ruling on Microsoft last week, the Bush administration finds itself caught between two conservative factions and one mighty big billionaire. On one flank, Bush and company are contending with free-marketeers who argue the monopolistic company should be broken up, as dictated by the original decision. On the other, the administration faces heat from the libertarian crowd, who want to see Microsoft carry on unfettered by antitrust law. Then there's the sheer financial power of Bill Gates, who's ready to unleash a herd of lobbyists on Capitol Hill and who controls an enormous amount of campaign cash.
In Thursday's 7-0 decision, the appellate judges ruled that Microsoft was indeed squelching competition, but reversed the lower court's order to dismember the software giant.
That left Attorney General John Ashcroft little room for wiggling, but he used it all. Speaking to reporters, Ashcroft first praised what is essentially a win for the Clinton Justice Department, which prosecuted Microsoft, then declined to declare the next step. "We believe this is a significant victory in terms of the determination made by a unanimous court that Microsoft had engaged in unlawful conduct," he said. "But I'm not prepared at this time to indicate what the final outcome to be pursued on the part of the Justice Department is. We'll shape our response to the decision after we have more time to digest it."
Ashcroft may not get much say, since the real power lies with the conservative bigwigs who pull Bush's strings. They're engaged in a roiling behind-the-scenes battle that pits the likes of Ken Starr and Robert Bork against fellow hardball right-wingers.
Bork, now of the American Enterprise Institute in Washington, argued during the trial that Microsoft had not only broken the antitrust laws, but was continuing predatory practices to crush competitors. The onetime heavyweight judge said the government prosecution is "the strongest antitrust case in the last 20 years."
Former federal appeals court judge Starr, the very symbol of the right-wing wrecking ball, also advocated splitting up Microsoft. "It does no good simply to issue a 'Thou Shall Not Do This,'" said Starr, working for a high-tech trade group called the Project to Promote Competition. "We've been there; we've done that. It's time, especially given the evidence that came out at trial, for a structural remedy."
Starr and Bork stand in opposition to the Heritage Foundation, Washington's preeminent conservative think tank. Last year the group released a paper by Daniel Mitchell, its free-market tub thumper, in support of leaving Gates's corporation alone. "The federal government's persecution of Microsoft is a travesty," Mitchell wrote, "the worst combination of third-rate economics and special-interest politics."
Mitchell's views are shared by Robert Levy of the libertarian Cato Institute, who said Microsoft has been snared in an "Orwellian world." "Antitrust law aside, the principle of the matter is simple," Levy wrote. "Microsoft created its operating system and has a right to sell the system as it sees fit." Ever the pragmatist, Levy acknowledged last week that Gates was in no danger of having his empire carved up. "That is out the window," he told the Voice. "There is a possibility that Microsoft will be slapped on the wrist with conduct rulings. Both parties would love to settle the case."
Bill Gates will wish things were so simple. Nineteen states joined the government's suit, and they are not about to back down. Rather than closing the door to further action, the appellate ruling all but ushers in a rash of private lawsuits, including possible class actions based on the finding that Microsoft harmed smaller companies.
"Remember that there are two different agendas here for Microsoftthe case itself and the private suits that followed it," the antitrust lawyer Marc Williamson, of Latham & Watkins, told reporters. "A final judgment of liability will be admissible in the private suits without regard to what the remedy is. And the damages can be huge."
Judge Thomas Penfield Jackson must have thought he had every right to discuss the Microsoft case, while it was still going on, with reporters who agreed to file their stories only after his decision had been handed down. But in doing so, he blasted the legs out from under his own ruling. While agreeing with Jackson's findings of fact, the appellate court nixed his plan to break up Microsoft and removed him from the suit because he had created the appearance of bias. "The violations [by Jackson] were deliberate, repeated, egregious, and flagrant," wrote the justices. "The only serious question is what consequences should follow."
This wasn't the first time Jackson had made less-than-discreet remarks. He served as judge for the 1991 drug trial of D.C.'s mayor-for-life Marion Barry. Jackson made headlines when he told a Harvard gathering he couldn't believe some jurors thought Barry was innocent.