Microsoft blew it.
The big Microsoft monopoly trial didn’t have to turn out this way. It did not have to turn out as a total triumph for the government, and a debacle for Bill Gates and his disciples.
Microsoft made major missteps at every step along the way. It turned a winnable case into a rout for trust-buster Joel Klein and the Microsoft competitors who first whined about Ma Bill.
There was a lot of talk about computer code in the trial. But Microsoft’s debacle was written in another kind of code: the genetic code of Microsoft’s corporate character.
Bill Gates’ egomania is the essence of Microsoft. He can’t imagine Microsoft making a mistake, and scorns anyone who suggests otherwise.
Microsoft applied its bullying, blustering, total-victory-at-all-costs ethos in the U.S. courts–to disastrous effect.
Microsoft could have won the case if it had focused the trial on one core issue: market economics.
There is a strong economic case that Microsoft’s monopoly in Windows was natural, and would organically extend into the Internet. It cost Microsoft nothing to include Internet Explorer with its Windows software, so it was only common sense to bundle the two–not the illegal “tying” the government alleged.
Microsoft did make a stab at arguments along those lines. But the company’s case got lost in the fury the government successfully fanned over Microsoft’s bare-knuckles competitive manner and its raw monopolism.
The government did such a masterful job of depicting Microsoft as a hulking, predatory and dangerous beast that Judge Thomas Penfield Jackson seemed unable to fathom that Microsoft could act from purely economic motives.
“Microsoft could have raised the level of debate out of the trenches by shifting the debate to the economic arguments, but they never did,” Harvard law professor Lawrence Lessig told me. Lessig helped Judge Jackson craft his Microsoft ruling so it will pass muster with the court of appeals.
Microsoft’s effort seemed doomed from the start.
The Redmondites so detested the genesis of the government’s case–the tattling by competitors Sun Microsystems, Netscape and others–that it never took the underlying facts seriously enough. It underestimated Jackson’s tactical skill in driving the trial to the result he clearly wanted, and seemed unable to imagine Jackson would have the nerve to bust up the world’s largest software company.
Guess again, Gates.
Microsoft could never focus the court’s attention on economics because government lawyer David Boies expertly dictated the course of the trial.
Judge Jackson eagerly followed Boies as he wove a story about Microsoft’s killer competitiveness, its bad faith in prior government disputes, and its ultimate unwillingness to make any concessions to avoid an outright judgment against it.
The company didn’t help itself either.
Bill Gates’ testy and vague responses during his own videotaped deposition helped turn him into the the government’s best witness. E-mail from Gates and other Microsofties was the government’s strongest evidence.
And who could ever forget Microsoft’s doctored demonstration of how its software works?
By the time Microsoft lawyer John Warden in closing arguments plaintively insisted that the issue of “harm” should be central to Judge Jackson’s ruling, the case was lost.
Gates apparently has learned nothing from the experience. His only regret, he said Wednesday, was “the failure to make the judge understand the whole PC phenomenon.” It’s the judge’s fault, not Microsoft’s.
Gates deservedly gets credit for most every success Microsoft has had. Credit him with steering Microsoft toward its biggest loss, too.
