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MSFT restructuring likely
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February 18, 1999: 11:24 p.m. ET
But judge has given little indication on possibilities for antitrust decision
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NEW YORK (CNNfn) - Microsoft Corp., faced by "an astonishing array of facts" of antitrust violations, is likely to undergo some kind of restructuring at the hands of a federal judge, an antitrust expert said Thursday.
Still, U.S. District Judge Thomas Penfield Jackson, presiding over the antitrust case against the software giant, has given little indication how he might deal with the company to prevent it from engaging in anticompetitive behavior in the future, Einer Elhauge, law professor at Harvard Law School, said on "Moneyline News Hour with Lou Dobbs."
Here are highlights from that interview:
LOU DOBBS, ANCHOR: Is it your judgment that at this point, Microsoft is indeed losing the case?
EINER ELHAUGE, HARVARD LAW SCHOOL: Oh, yes. I think there's two key factors that the government had to establish. One was monopoly power, and the other was exclusionary conduct.
On monopoly power, even Microsoft's own witness seemed to concede important factors that suggest monopoly power is present. And on exclusionary conduct, that is conduct that tends to exclude competitors, there's just been so many top level executives from so many big computer firms testifying that there was, you know, basically naked threats to cut them off unless they cut off Netscape and other competitors. That makes a very compelling case.
DOBBS: Einer, the idea amongst some observers of this case that Microsoft should have easily won the case. Are you surprised with where we are at this juncture? Do you agree that Microsoft should have, for whatever reason, easily have won this case?
ELHAUGE: I don't think they should have easily won the case. I think this case might have seemed winnable at the beginning. Now David Boies and the Department of Justice, though, have come up with an astonishing array of facts. When this case started, it sounded like the only issue was whether Microsoft could bundle its Internet explorer into its operating system.
DOBBS: What do you think the result will be should the government win this case?
ELHAUGE: I think there's three possibilities, and this is a really very interesting question because the judge has not given much indication, and we haven't really had a good briefing or argument about it. But there's basically three possibilities.
At one extreme, the judge might issue an injunction that essentially says, "Sin no more," that, "We're going to enjoin you from engaging in the kind of activities you've already engaged in."
At the other extreme, the court might say, "You've maintained your monopoly power through illegal means so we're going to break it up, break up Microsoft into multiple operating systems."
The intermediate remedy would be structural, to try to restructure Microsoft in some way to make it much more difficult to abuse its monopoly power to gain advantages in applications, including the Internet browser.
DOBBS: The most likely outcome?
ELHAUGE: I think the intermediate one is most likely. I mean, the trouble with the "sin no more" remedy is it doesn't really add much to what the law already provides and it doesn't really penalize them for activities that might have bolstered monopoly power.
The trouble with breaking them up is it might be economically unfeasible. This might be a market where consumers prefer one operating system.
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