Microsoft-DOJ case: Three years and counting

WASHINGTON, D.C. - Three years of legal maneuvering, two attorneys general and one bruised computer industry later, the U.S. Department of Justice and 19 states remain pitted against software behemoth Microsoft in a high-stakes antitrust battle.

Last Friday marked the third anniversary that the software maker from Redmond, Wash., officially became the defendant in what has turned into one of the most important cases in the history of U.S. antitrust law. On May 18, 1998, after four years of prior courtroom activity and six more of behind-the-scenes government inquiry, a legal team headed by then-U.S. Assistant Attorney Joel Klein filed a 53-page document with a U.S. District Court alleging that the world's largest software maker was in violation of antitrust laws.

After a year of trial court hearings, District Court Judge Thomas Penfield Jackson delivered a verdict that essentially bought wholesale the government's charges that Microsoft used a monopoly in the PC operating systems market to illegally quash competition. But Jackson's decision only set off more legal noise in the industry, including Microsoft's appeal in the U.S. Court of Appeals in the District of Columbia, which is set to decide on the case any day now.

It has also set a new precedent for the concept of judicial time, legal experts say.

"As large U.S. monopolization cases go, this case is moving very quickly," says Bill Kovacic, a law professor at George Washington University law school in Washington, D.C. "To a layperson it may seem like the progress of a glacier, but in antitrust terms this is the speed of light."

Compared to previous antitrust cases against such technology heavyweights as IBM and AT&T, which lasted as long as 12 years, Microsoft's case has been a short one.

While the federal case against Microsoft has been swift legally speaking, it has seemed like eons for the software industry. As lawyers duke it out with rhetoric, new products - and, according to critics, the same old tough-as-nails business strategies - continue to emanate from Redmond. Microsoft's .Net initiative, Xbox video game console, wireless and mobile devices, and new version upgrades to Windows and the Office desktop software suite all continue to make headlines.

"Microsoft has to continue to innovate and develop new products or some other competitor will take our place," says Jim Cullinan, a Microsoft spokesman.

Three years after the government filed its charges, the Justice Department continues to argue that PC manufacturers had "no commercially reasonable alternative to Microsoft's operating systems for the PCs that they distribute." Proponents, including Microsoft, argue that a "commercially reasonable alternative" exists today in a number of competitors, from Java to open-source operating system underdog Linux.

Lately, it has been difficult to see that argument through because even though alternative technologies such as Linux pose a threat to the huge Windows-related software portfolio, unsettling financial markets have dampened the momentum of many Microsoft competitors.

Critics contend that after three years under the microscope of U.S. law, Microsoft still controls not only 90% of the world's desktops but is working to extend its reach into other markets, from enterprise software to telecommunications and even television. With Microsoft making inroads beyond the coveted desktop PC and getting a more diversified grip on the technology market, concerns that the result of the antitrust case will have little effect on the industry are becoming more acute.

"The Justice Department's antitrust case seems to be dying a death of a thousand cuts," says Charles King, a senior industry analyst with Zona Research. "If it ever does get to the Supreme Court, I wouldn't expect any serious repercussions to come of it."

Microsoft shares a similar view. The company continues to bundle more of its applications, such as its Windows Media Player, into new versions of its operating system, irking many critics who say Microsoft is engaging in anticompetitive behavior more than ever. Similarly, as it unveils more news about the .Net Web services platform, Microsoft looks like it may manage to latch onto yet another shift in the computing industry, toward software systems distributed across the Internet.

Berger is a correspondent with the IDG News Service in San Francisco.