A federal judge today denied the vast majority of Microsoft's request to dismiss antitrust prosecutors' landmark suit against it, ruling that genuinely disputed factual issues at the heart of the case--some substantiated in previously confidential memos among Microsoft executives--can be resolved only by going to trial.
In a related move, the judge granted a request by both sides to delay the trial by three weeks to October 15.
Microsoft last month filed a motion for summary judgment, arguing that attorneys from the Justice Department and 20 states had not met minimum standards required for bringing the case. On that basis, Microsoft said, every one of the claims should be decided in its favor without the expense and delay of going trial.
But in a 54-page ruling, U.S. District Judge Thomas Penfield Jackson rejected all but one of Microsoft's requests, finding "sufficient material facts to be in dispute." Jackson dismissed one claim raised only by state attorneys alleging that Microsoft "leveraged" its Windows operating system to establish a foothold in the market for Internet software. The states' claim, the judge ruled, was "inconsistent" with the plain language in federal antitrust law.
The decision does not come as a big surprise, since it essentially maintains the status quo, and because Jackson in the past has demonstrated a willingness to entertain allegations that Microsoft has engaged in practices that may violate antitrust law.
Still, the order gives the public new details of internal email messages sent among Microsoft executives and provides some indication as to how the jurist may frame a number of complex and seemingly contradictory issues at trial.
For instance, citing evidence the government has introduced under seal, Jackson claimed, "Microsoft CEO Bill Gates stated that the Netscape/Java combination threatens to 'commoditize' the operating system." Gates also sought "to wrest control of Java away from Sun," and directed his subordinates to convert the language to "polluted" form that would be dependent on Windows.
In addition, in 1997, Microsoft executive Ben Slivka told Gates Java was "the biggest threat to Microsoft" and that Microsoft's Java team had "hit a raw nerve with you."
Another Microsoft executive warned that the "situation [raised by Netscape Communications' Navigator browser] is threatening our operating system and desktop applications share at a fundamental level," and declared that "Netscape pollution must be eradicated."
Apart from providing the public with new details of the government's case, the ruling may indicate Jackson's willingness to consider allegations the government introduced only recently. The new allegations claim that Microsoft illegally thwarted a wide range of products, including Sun Microsystems' Java programming language, by putting pressure on business partners. Previously, the suit focused primarily on how Microsoft competed against Netscape in the market for Web browsers.
Microsoft has asked Jackson to exclude the evidence, accusing the government of plotting an "ambush" just weeks before the parties square off in court. Jackson has yet to rule on the motion.
In today's ruling Jackson also appears skeptical of Microsoft's claims that a June ruling by a federal appeals court automatically precludes the vast majority the government's claims. That ruling, issued by the U.S. Court of Appeals for the District of Columbia in a related case, held that integrated products generally are not in violation of antitrust laws so long as they provide a plausible technical benefit to consumers.
Because a major element in the government's present case concerns Microsoft's decision to fold its Internet Explorer browser into Windows, the software giant argued that the suit should be thrown out because it is at odds with the ruling. Jackson rejected the argument.
"The Court of Appeals expressed its 'tentative' view that the Windows 95/IE combination amounted to a 'genuine' integration, but expressly left to a more fully developed factual record the final determination of whether Microsoft's claims of 'technological benefits' could be substantiated," Jackson explained. "Because numerous issues of material fact remain in dispute as the record presently stands, the court will deny Microsoft's motion for summary judgment on the tying claims."
Predictably, both sides in the dispute said they were pleased with the ruling.
"While we're disappointed that the court did not dismiss the entire case, we're very pleased that the court has narrowed the case by dismissing one of the government's claims," said Microsoft spokesman Mark Murray. "We believe that we will be able to show overwhelming consumer benefit from our decision to build Internet features into the Windows operating system."
A Justice spokeswoman countered that government attorneys were "pleased with the court's decision and look forward to the upcoming trial."