Article 68 of 200
Eventual Microsoft settlement predicted Experts see change with new president
John Hendren
The Seattle Times
Page A1
Copyright (c) 2000 Bell & Howell Information and Learning Company. All rights reserved.


NEW YORK - The Justice Department is likely to settle its landmark antitrust suit against Microsoft under either President George W. Bush or President Al Gore, but not under President Clinton, a politically connected Microsoft ally and a leading academic predicted yesterday.

The predictions from two high-profile antitrust watchers come as Microsoft has signaled it will seek to extend U.S. District Judge Thomas Penfield Jackson's schedule in deciding the company's punishment and is likely to oppose an expedited appeal to the U.S. Supreme Court.

The government last week presented the court a proposal to break Microsoft in two, and the company is scheduled to present its own proposal Wednesday.

C. Boyden Gray, an aide to Presidents Reagan and Bush and now a legal consultant for Microsoft, and Nicholas Economides , dean of New York University Stern School of Business, made their forecasts at a legal conference on the historic antitrust case hosted by the university.

"I think the likelihood is that it be settled," Gray said. The Justice Department would be "more the same with Gore, but there would be a change. Any administration is going to put new people in."

Economides went further, predicting that:

An appeals court would overturn Jackson's finding that Microsoft illegally tied its Internet Explorer Web browser to its Windows operating system.

The weakened case would be settled under Gore or Bush, but not Clinton.

Microsoft's legal fees would reach $6 billion by that time.

The lengthy legal battle and continued antitrust scrutiny would leave the software maker unable to make significant acquisitions it otherwise would pursue during the next two years.

"I think the current administration would have a hard time settling," Economides said.

New antitrust enforcers would likely bring a less impassioned approach, particularly under Bush, Economides said.

"But I wouldn't be surprised if Gore cut a deal as well," he said. "His incentive would be: `It's an old case, we inherited it - let's come up with a solution everyone can be happy with.' "

One source involved in the case said too much antagonism has occurred among the parties for a settlement under current Justice Department leadership.

"We hate them," the source said. "They hate us."

Under traditional changes in administration, top officials such as the attorney general - currently Janet Reno - and the assistant attorney general for antitrust enforcement - now Joel Klein - are expected to tender their resignations.

Gray noted that even when Reagan was succeeded by his vice president, George Bush, new leaders were named.

George W. Bush, the former president's son, has criticized the Justice Department's handling of the case, saying he hopes government lawyers don't "ruin" the nation's largest software maker. But a spokesman for Bush, who has recently faced criticism that his policies would alter the nation's stance on gun control and other issues, declined to say whether Bush would side with Microsoft.

"As president, he will enforce our antitrust laws to protect consumers and foster competition and innovation," campaign spokesman Scott McClellan said yesterday.

The Gore campaign declined to comment, as did Justice Department attorney Doug Melamed, who also addressed the NYU gathering.

Participants were divided on how the case should be resolved. Some insisted an AT&T-style split remains the only viable solution.

"The breakup remedy has the advantage that it's relatively simple and it's relatively nonintrusive - that is, after the breakup itself," said Daniel Rubinfeld, a professor of law and economics at the University of California, Berkeley.

Robert Gertner, an economics professor at the University of Chicago who opposes the government's plan, said his ideal solution is not a remedy the government could legally seek: "a very large fine in the high billions of dollars."

Missing from the forum was David Boies, the attorney who has served as lead counsel for the Justice Department during the trial. NYU officials said Boies, who has been widely praised for his effectiveness in presenting the government's case, called shortly before the conference began to say Justice officials asked him not to speak at the conference. Melamed said that the cancellation was a result of miscommunication and that he had called Boies Thursday to let him know he could speak, but Boies had made other plans.

Meanwhile, Gray and Microsoft attorney Charles "Rick" Rule raised the possibility that a Bush administration might drop the case entirely, although it is unclear whether that would be enough to stop a court case in which Microsoft already has been found to have violated the law.

"The government can always go in and confess error in a case, and perhaps an enlightened official will," said Rule, who was assistant attorney general in charge of the antitrust division from 1986 to 1989. However, he added, "They don't need political intervention to win. They just need an appropriate application of law."

When a congressman asked Microsoft Chairman Bill Gates, during his recent visit to Capitol Hill, whether a new administration might make a difference, Gates said it "might," but he did not ask for help or state a preference for the next president.

Yet Microsoft has launched advertisements apparently designed to influence the public on the case, airing separate spots in which Gates and Chief Executive Steve Ballmer talk about Microsoft's contributions to innovation.

"I think Microsoft will win an appeal," Gray said. "That doesn't mean they shouldn't try to end it, for the good of the nation, through settlement."

John Hendren's phone-message number is 206-464-2772. His e-mail address is


PHOTO; Caption: George W. Bush; Caption: Al Gore

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