Microsoft looks to cut deal
November 7, 1999
New YorkNew York — The judge's blunt language in declaring Microsoft a monopoly Friday could prompt the combative software maker to seek a truce in its war with the government instead of dragging the case out with court appeals, industry analysts said. — The judge's blunt language in declaring Microsoft a monopoly Friday could prompt the combative software maker to seek a truce in its war with the government instead of dragging the case out with court appeals, industry analysts said.
New York — The judge’s blunt language in declaring Microsoft a monopoly Friday could prompt the combative software maker to seek a truce in its war with the government instead of dragging the case out with court appeals, industry analysts said.
”I see very little subtlety here,” said Carl Howe, an industry analyst at Forrester Research in Massachusetts. ”Using the word ‘monopoly’ means a very specific thing … There wouldn’t have been any pressure to settle this if that had not been the case.”
U.S. District Judge Thomas Penfield Jackson ruled that Microsoft has used its dominance of the personal computer software industry to stifle competition, hurting consumers.
While few had expected a victory for Microsoft in its antitrust trial, the harsh and stinging tone of the decision startled many observers.
”I was really surprised,” said Bob Davis, chairman and chief executive of Lycos, the Web network and search service. ”I didn’t expect the force or the condemnation that we have seen.”
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Art Russell, an industry analyst with Edward Jones, an investment firm in St. Louis, also said the ruling could force Microsoft to rethink its legal strategy and pursue a settlement. ”The way this thing is worded so harshly that language is a little strong.”
However, he added, an appeals court could find the judge’s tone extreme, helping Microsoft get the decision overturned.
Predictably, Microsoft’s rivals gloated, the company’s supporters stressed that the decision is only a first step in deciding the case and investors pounded the company’s stock in after-hours trading.
”Hallelujah. If we could jump any higher right now, we would,” said Ransom Love, president and chief executive of Caldera Inc., a Utah-based software maker that’s suing Microsoft in a separate case charging predatory practices.
Paul Rothstein, a Georgetown University law professor and a consultant to Microsoft, said the decision was an ”unwarranted extension of the antitrust laws,” adding that it is too soon to say Microsoft has lost the case.
As expected, the judge made no mention of potential punishments, which likely won’t be determined until well into next year. At the extreme, he could order that Microsoft be broken up into smaller companies.
Other possibilities include forcing Microsoft to allow rivals to sell their own versions of the Windows operating system, requiring Microsoft to incorporate rival products in Windows, or preventing Microsoft from selling Windows at lower prices to favored computer makers.
Microsoft’s shares plunged about 3 percent after the ruling was released. The stock had ended the regular trading day on the Nasdaq Stock Market at $91.56 1/4, but fell to $87.06 1/4 in after-hours trading on other markets.
But, said Russell, the Edward Jones analyst, ”As a shareholder of Microsoft, I would not panic and sell the stock. The business is still very solid.”