EXHIBIT 99.2
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
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UNITED STATES OF AMERICA, )
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Plaintiff, )
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v. ) Civil Action No. 98-1232 (TPJ)
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MICROSOFT CORPORATION, )
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Defendant. )
_________________________________________)
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STATE OF NEW YORK, et al., )
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Plaintiffs, )
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v. )
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MICROSOFT CORPORATION, )
)
Defendant. )
_________________________________________) Civil Action No. 98-1233 (TPJ)
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MICROSOFT CORPORATION, )
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Counterclaim-Plaintiff, )
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5. )
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ELIOT SPITZER, attorney general of the )
State of New York, in his official )
capacity, et al., )
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Counterclaim-Defendants. )
_________________________________________)
MEMORANDUM AND ORDER
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These cases are before the Court for disposition of the sole matter
presently remaining for decision by the trial court, namely, entry of
appropriate relief for the violations of the Sherman Act, (S)(S) 1 and 2, and
various state laws committed by the defendant Microsoft Corporation as found by
Court in accordance with its Findings of Fact and Conclusions of Law. Final
judgment will be entered contemporaneously herewith. No further proceedings
will be required.
The Court has been presented by plaintiffs with a proposed form of final
judgment that would mandate both conduct modification and structural
reorganization by the defendant when fully implemented. Microsoft has responded
with a motion for summary rejection of structural reorganization and a request
for months of additional time to oppose the relief sought in all other respects.
Microsoft claims, in effect, to have been surprised by the "draconian" and
"unprecedented" remedy the plaintiffs recommend. What it proposes is yet
another round of discovery, to be followed by a second trial - in essence an ex
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post and de facto bifurcation of the case already considered and rejected by the
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Court.
Microsoft's profession of surprise is not credible./1/ From the inception
of this case Microsoft knew, from well-established Supreme Court precedents
dating from the beginning of the last century, that a mandated divestiture was a
possibility, if not a probability, in the event of an adverse result at trial.
At the conclusion of the trial the Court's Findings of Fact gave clear warning
to Microsoft that the result would likely be adverse, yet the Court delayed
entry of its
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/1/ Despite their surprise, compounded no doubt by the Court's
refusal on May 24th to allow discovery and take testimony on the issue,
Microsoft's attorneys were promptly able to tender a 35-page "Offer of Proof,"
summarizing in detail the testimony 16 witnesses would give to explain why
plaintiffs' proposed remedy, in its entirety, is a bad idea. Within a week they
added seven more.
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Conclusions of Law for five months, and enlisted the services of a
distinguished mediator, to assist Microsoft and the plaintiffs in reaching
agreement on a remedy of some description that Microsoft knew was inevitable.
Even assuming that Microsoft negotiated in utmost good faith in the 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 likely to be acceptable to Microsoft. Its failure to
anticipate and to prepare to meet such an eventuality gives 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 the past two years, not counting the antecedent proceedings.
Following a full trial Microsoft has been found guilty of antitrust violations,
notwithstanding its protests to this day that it has committed 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
same reasons, that a structural remedy has become imperative: Microsoft as it is
presently organized and led is unwilling to accept the notion that it broke the
law or accede to an order amending its conduct.
First, despite the Court's Findings of Fact and Conclusions of Law,
Microsoft does not yet concede that any of its business practices violated the
Sherman Act. Microsoft officials have recently been quoted publicly to the
effect that the company has "done nothing wrong" and that it will be vindicated
on appeal. The Court is well aware that there is a substantial body of public
opinion, some of it rational, that holds to a similar view. It is time to put
that assertion to the test. If true, then an appellate tribunal should be given
early opportunity to confirm it as promptly as possible, and to abort any
remedial measures before they have become irreversible
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as a practical matter.
Second, there is credible evidence in the record to suggest that Microsoft,
convinced of its innocence, continues to do business as it has in the past, and
may yet do to other markets what it has already done in the PC operating system
and browser markets. Microsoft has shown no disposition to voluntarily alter
its business protocol in any significant respect. Indeed, it has announced its
intention to appeal even the imposition of the modest conduct remedies it has
itself proposed 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 a preliminary injunction was entered, Microsoft's purported
compliance with that injunction while it was on appeal was illusory and its
explanation disingenuous. If it responds in similar fashion to an injunctive
remedy in this case, the earlier the need for enforcement measures becomes
apparent the more effective they are likely to be.
Finally, the Court believes that extended proceedings on the form a remedy
should take are unlikely to give any significantly greater assurance that it
will be able to identify what might be generally regarded as an optimum remedy.
As has been the case with regard to Microsoft's culpability, opinion as to an
appropriate remedy is sharply divided. There is little chance that those
divergent opinions will be reconciled by anything short of actual experience.
The declarations (and the "offers of proof") from numerous potential witnesses
now before the Court provide some insight as to how its various provisions might
operate, but for the most part they are merely the predictions of purportedly
knowledgeable people as to effects which may or may not ensue if the proposed
final judgment is entered. In its experience the Court has found testimonial
predictions of future events generally less reliable even than testimony as to
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historical fact, 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 by Microsoft as being vague and ambiguous. Plaintiffs respond
that, to the extent it may be lacking in detail, it is purposely so to allow
Microsoft itself to propose such detail as will be least disruptive of its
business, failing which plaintiffs will ask the Court to supply it as the need
appears.
Plaintiffs won the case, and for that reason alone have some entitlement to
a remedy of their choice. Moreover, plaintiffs' proposed final judgment is the
collective work product of senior antitrust law enforcement officials of the
United States Department of Justice and the Attorneys General of 19 states, in
conjunction with multiple consultants./2/ These officials are by reason of
office obliged and expected to consider - and to act in - the public interest;
Microsoft is not. The proposed final judgment is represented to the Court as
incorporating provisions employed successfully in the past, and it appears to
the Court to address all the principal objectives of relief in such cases,
namely, to terminate the unlawful conduct, to prevent its repetition in the
future, and to revive competition in the relevant markets. Microsoft's
alternative decree is plainly inadequate in all three respects.
The final judgment proposed by plaintiffs is perhaps more radical than
might have resulted had mediation been successful and terminated in a consent
decree. It is less so than that
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/2/ Two states dissented from the imposition of structural remedies
but fully supported the remainder of the relief proposed. The absence of total
unanimity merely confirms the collaborative character of the process by which
the proposed final judgment was formulated.
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advocated by four disinterested amici curiae. It is designed, moreover, to take
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force in stages, so that the effects can be gauged while the appeal progresses
and before it has been fully implemented. And, of course, the Court will retain
jurisdiction following appeal, and can modify the judgment as necessary in
accordance with instructions from an appellate court or to accommodate
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
rejection of the plaintiffs' proposed structural reorganization is denied; and
it is
FURTHER ORDERED, that defendant Microsoft Corporation's "position" as to
future proceedings on the issue of remedy is rejected; and it is
FURTHER ORDERED, that plaintiffs' proposed final judgment, as revised in
accordance with the proceedings of May 24, 2000 and Microsoft's comments
thereon, be entered as a Final Judgment herein.
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Thomas Penfield Jackson
U.S. District Judge
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