UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

)
)
UNITED STATES OF AMERICA, )
)
Plaintiff, )
)
v. ) Civil Action No. 98-1232 (TPJ)
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MICROSOFT CORPORATION, )
)
Defendant. )
)

)
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STATE OF NEW YORK, et al., )
)
Plaintiffs, )
)
v. )
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MICROSOFT CORPORATION, )
)
Defendant. )
)

) Civil Action No. 98-1233 (TPJ)
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MICROSOFT CORPORATION, )
)
Counterclaim-Plaintiff, )
)
v. )
)
ELIOT SPITZER, attorney )
general of the State of )
New York, in his official )
capacity, et al., )
)
Counterclaim-Defendants. )
)



MEMORANDUM AND ORDER



These cases are before the Court for disposition of the sole matter presently remaining fordecision by the trial court, namely, entry of appropriate relief for the violations of the ShermanAct, лл 1 and 2, and various state laws committed by the defendant Microsoft Corporation asfound by Court in accordance with its Findings of Fact and Conclusions of Law. Final judgmentwill be entered contemporaneously herewith. No further proceedings will be required.

The Court has been presented by plaintiffs with a proposed form of final judgment thatwould mandate both conduct modification and structural reorganization by the defendant whenfully implemented. Microsoft has responded with a motion for summary rejection of structuralreorganization and a request for months of additional time to oppose the relief sought in all otherrespects. Microsoft claims, in effect, to have been surprised by the "draconian" and"unprecedented" remedy the plaintiffs recommend. What it proposes is yet another round ofdiscovery, to be followed by a second trial - in essence an ex post and de facto bifurcation of thecase already considered and rejected by the Court.

Microsoft's profession of surprise is not credible.(1) From the inception of this caseMicrosoft knew, from well-established Supreme Court precedents dating from the beginning ofthe last century, that a mandated divestiture was a possibility, if not a probability, in the event ofan adverse result at trial. At the conclusion of the trial the Court's Findings of Fact gave clearwarning to Microsoft that the result would likely be adverse, yet the Court delayed entry of itsConclusions of Law for five months, and enlisted the services of a distinguished mediator, toassist Microsoft and the plaintiffs in reaching agreement on a remedy of some description thatMicrosoft knew was inevitable. Even assuming that Microsoft negotiated in utmost good faith inthe course of mediation, it had to have in contemplation the prospect that, were mediation to fail,the prevailing plaintiffs would propose to the Court a remedy most to their liking and least likelyto be acceptable to Microsoft. Its failure to anticipate and to prepare to meet such an eventualitygives no reason to afford it an opportunity to do so now.

These cases have been before the Court, and have occupied much of its attention, for thepast two years, not counting the antecedent proceedings. Following a full trial Microsoft hasbeen found guilty of antitrust violations, notwithstanding its protests to this day that it hascommitted none. The Court is convinced for several reasons that a final - and appealable -judgment should be entered quickly. It has also reluctantly come to the conclusion, for the samereasons, that a structural remedy has become imperative: Microsoft as it is presently organizedand led is unwilling to accept the notion that it broke the law or accede to an order amending itsconduct.

First, despite the Court's Findings of Fact and Conclusions of Law, Microsoft does notyet concede that any of its business practices violated the Sherman Act. Microsoft officials haverecently been quoted publicly to the effect that the company has "done nothing wrong" and that itwill be vindicated on appeal. The Court is well aware that there is a substantial body of publicopinion, some of it rational, that holds to a similar view. It is time to put that assertion to thetest. If true, then an appellate tribunal should be given early opportunity to confirm it aspromptly as possible, and to abort any remedial measures before they have become irreversibleas a practical matter.

Second, there is credible evidence in the record to suggest that Microsoft, convinced of itsinnocence, continues to do business as it has in the past, and may yet do to other markets what ithas already done in the PC operating system and browser markets. Microsoft has shown nodisposition to voluntarily alter its business protocol in any significant respect. Indeed, it hasannounced its intention to appeal even the imposition of the modest conduct remedies it has itselfproposed as an alternative to the non-structural remedies sought by the plaintiffs.

Third, Microsoft has proved untrustworthy in the past. In earlier proceedings in which apreliminary injunction was entered, Microsoft's purported compliance with that injunction whileit was on appeal was illusory and its explanation disingenuous. If it responds in similar fashionto an injunctive remedy in this case, the earlier the need for enforcement measures becomesapparent the more effective they are likely to be.

Finally, the Court believes that extended proceedings on the form a remedy should takeare unlikely to give any significantly greater assurance that it will be able to identify what mightbe generally regarded as an optimum remedy. As has been the case with regard to Microsoft'sculpability, opinion as to an appropriate remedy is sharply divided. There is little chance thatthose divergent opinions will be reconciled by anything short of actual experience. Thedeclarations (and the "offers of proof") from numerous potential witnesses now before the Courtprovide some insight as to how its various provisions might operate, but for the most part theyare merely the predictions of purportedly knowledgeable people as to effects which may or maynot ensue if the proposed final judgment is entered. In its experience the Court has foundtestimonial predictions of future events generally less reliable even than testimony as to historicalfact, and cross-examination to be of little use in enhancing or detracting from their accuracy.

In addition to its substantive objections, the proposed final judgment is also criticized byMicrosoft as being vague and ambiguous. Plaintiffs respond that, to the extent it may be lackingin detail, it is purposely so to allow Microsoft itself to propose such detail as will be leastdisruptive of its business, failing which plaintiffs will ask the Court to supply it as the needappears.

Plaintiffs won the case, and for that reason alone have some entitlement to a remedy oftheir choice. Moreover, plaintiffs' proposed final judgment is the collective work product ofsenior antitrust law enforcement officials of the United States Department of Justice and theAttorneys General of 19 states, in conjunction with multiple consultants.(2) These officials are byreason of office obliged and expected to consider - and to act in - the public interest; Microsoftis not. The proposed final judgment is represented to the Court as incorporating provisionsemployed successfully in the past, and it appears to the Court to address all the principalobjectives of relief in such cases, namely, to terminate the unlawful conduct, to prevent itsrepetition in the future, and to revive competition in the relevant markets. Microsoft's alternativedecree is plainly inadequate in all three respects.

The final judgment proposed by plaintiffs is perhaps more radical than might haveresulted had mediation been successful and terminated in a consent decree. It is less so than thatadvocated by four disinterested amici curiae. It is designed, moreover, to take force in stages, sothat the effects can be gauged while the appeal progresses and before it has been fullyimplemented. And, of course, the Court will retain jurisdiction following appeal, and can modifythe judgment as necessary in accordance with instructions from an appellate court or toaccommodate conditions changed with the passage of time.

It is, therefore, this _____ day of June, 2000,

ORDERED, that the motion of defendant Microsoft Corporation for summary rejectionof the plaintiffs' proposed structural reorganization is denied; and it is

FURTHER ORDERED, that defendant Microsoft Corporation's "position" as to futureproceedings on the issue of remedy is rejected; and it is

FURTHER ORDERED, that plaintiffs' proposed final judgment, as revised in accordancewith the proceedings of May 24, 2000 and Microsoft's comments thereon, be entered as a FinalJudgment herein.


______________________
Thomas Penfield Jackson
U.S. District Judge


1. Despite their surprise, compounded no doubt by the Court's refusal on May 24th to allowdiscovery and take testimony on the issue, Microsoft's attorneys were promptly able to tender a 35-page "Offer ofProof," summarizing in detail the testimony 16 witnesses would give to explain why plaintiffs' proposed remedy, inits entirety, is a bad idea. Within a week they added seven more.

2. Two states dissented from the imposition of structural remedies but fully supported the remainderof the relief proposed. The absence of total unanimity merely confirms the collaborative character of the process bywhich the proposed final judgment was formulated.