Arguing that Microsoft Corp. did not engage
in anti-competitive behavior in the computer industry, a
lawyer for the software giant began making the case Monday
that a trial judge was wrong when he ruled that the company
violated the nation's antitrust laws and should be broken
During four hours of intense oral arguments before a
Washington, D.C.-based federal appeals court, Microsoft lawyer
Richard Urowsky aggressively maintained that the company did
not stifle competition or harm competitors. Instead, he
argued, much of Microsoft's conduct actually benefited
But Urowsky ran into
tough questions by members of the U.S. Court of Appeals for
the D.C. Circuit, which took the unusual step of scheduling
seven hours of arguments in the case. Throughout Monday's
session, the judges strenuously questioned Urowsky and lawyers
for the government, expressing skepticism about arguments made
on both sides.
On Tuesday, the seven-member court will return to the bench
to focus on matters that most observers agree are more
favorable to Microsoft. The court will hear arguments on
whether to reverse U.S. District Judge Thomas Penfield
Jackson's drastic order that the company be split in two, as
well as whether Jackson was wrong not to hold hearings on that
remedy. It also will examine Jackson's widely reported
out-of-court remarks about Microsoft and its executives.
"They got off the mark today, and some predictable
questions were asked," said Fred McChesney, a professor who
teaches antitrust law at Northwestern University Law School.
"But tomorrow is more important. This remedy question is
The court is reviewing Jackson's ruling last June, when he
accepted virtually all of the recommendations of the Justice
Department and the states, which had joined forces in suing
Microsoft for violating the nation's antitrust laws. He
ordered the company broken apart, and imposed significant
restrictions on its business conduct.
At issue in Monday's arguments was whether Microsoft
engaged in illegal behavior to protect its monopoly power over
computer operating-system software, as Jackson found, and
whether it illegally tied its Internet Explorer browser to its
Windows operating system.
The first issue is widely considered the strongest aspect
of the government's case against Microsoft, and the judges hit
Urowsky with his toughest questions of the day as he defended
the company's behavior.
"That is the key issue, as far as the government is
concerned," said Jonathan Baker, a law professor at American
University. "This is where the government has to win in order
to justify the broad relief that was awarded in the district
Chief Judge Harry Edwards, considered one of the court's
most aggressive questioners, lived up to his reputation
"Does antitrust law not contemplate the possibility that we
will protect nascent seedlings of competition?" asked Edwards.
It protects them from conduct excluding them from the
marketplace, Urowsky said, but not from competition.
"Even nascent seedlings of competition can be highly
dangerous," Urowsky later added.
But the judges didn't let government lawyer Jeffrey Minear
off easily, either. When Minear proclaimed that the case is
"about allowing the competitive process to determine who will
be the winner in the market," Edwards jumped in.
How could Microsoft be said to destroy competition from a
company like Netscape if Netscape didn't reasonably threaten
its alleged monopoly in the PC operating systems market,
On the tying issue, most observers have suggested that the
appeals court is likely to see the law differently than
Jackson did. The law in the area is in flux, and even Jackson
suggested in his opinion last summer that the appeals court
may not share his view.
Indeed, although predicting how the court will rule based
on its questions is all but impossible, most of the judges
seemed skeptical of that aspect of Jackson's ruling and
hammered government lawyer John G. Roberts Jr.
On the first issue, the judges did not tip their hands,
peppering Urowsky and Minear with equally rigorous questions.
Microsoft, however, has a steep hill to climb.
That's partly because Jackson, in ruling that Microsoft
violated the Sherman Antitrust Act, made specific factual
findings. On appeal, a reviewing court generally will not
disturb a trial judge's findings on factual issues unless they
clearly were wrong--a very high standard to meet. Instead,
they generally are looking at the legal issues and whether the
trial judge properly interpreted and applied the law.
Some of the morning's argument, in fact, centered on
precisely that point. Several judges seemed exasperated that
Urowsky was arguing about factual issues.
"You've made a very powerful argument about your view of
the facts, but we're not a district court," said Judge David
Added Judge David Sentelle: "I had a strong sense you
thought we were a jury when I was reading your brief."
But by the afternoon session, other judges seemed more
willing to jump in and look at the evidence.
"I hear my colleagues say we're suppose to defer to factual
findings," said Chief Judge Harry Edwards. But when factual
findings contain no citation to the record, "I don't think my
duty as an appellate court is to defer to them."
Nicholas Economides, a professor at NYU's business school,
said Edwards' remarks were significant, particularly if they
indicated that the court may be willing to revisit Jackson's
factual findings, which were overwhelmingly for the
government. "It shows the appellate court judges may be
willing to restate the findings of fact in a way that may be
more favorable to Microsoft," he said.
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