With the proposed remedies submitted by both Microsoft Corporation and the U.S. government out of the way, the next phase of the seemingly endless Microsoft antitrust trial will continue this week when Judge Thomas Penfield Jackson presides over a remedy hearing on Wednesday. The hearing could be the first of several such meetings between the judge and lawyers for both sides, and analysts will be paying close attention to the judge, who may make indications about which way he'll decide. The U.S. government released its remedy proposal first, a scathing attack on Microsoft's business practices that recommended a breakup of the company. Microsoft's proposal, however, offered up a conduct remedy that would simply curtail its business practices with a consent decree. The company was found guilty of violating the Sherman Antitrust Act in early April.
Few doubt that Judge Jackson will agree with the U.S. government, as the language of his findings and rulings against Microsoft have been singularly brutal and condemning. In fact, the government's proposal read much like a brief that Jackson himself might write, in that it was harshly critical of the company and its inability to stop straying outside the law. Microsoft, which was awkwardly forced to submit a proposed remedy for a crime it says it did not commit, has repeatedly promised to appeal the case, regardless of the judge's ruling. But Microsoft will probably get at least one request granted: With a remedy as strict as breaking up the company, it's likely that the judge will allow Microsoft to have more time to prepare its defense. Whether they will receive the six-month hiatus they requested, however, remains to be seen.
Another interesting and little-debated possibility is that the judge will ultimately decide to forgo both of the remedy proposals that have been submitted and work up one of his own. For example, many have asserted that Microsoft deserves to be broken up but that the DOJ plan--which splits Microsoft into separate "Windows" and "Office" companies--doesn't go far enough. The judge might opt to split Microsoft into five or more companies, for example: Three that could sell competing versions of Windows, one for Office and other applications, and one for Internet applications. Or the judge could require Microsoft to open its Windows and Office APIs to third party developers so that any company might make competing versions of Microsoft's monopoly products. Either of these plans would directly benefit consumers by giving them more choice and a set of competing products from a variety of companies would lower prices.
Whatever happens, it's clear that the Microsoft of the past is all but over: Though the company could still win or receive a reduced punishment on appeal, it is unlikely that it will be able to continue operating as it has in the past because of close public scrutiny and decaying loyalty. And as the software market changes slowly from CD-delivered desktop systems to Internet-delivered post-PC devices, Microsoft will face competitors that have yet to be born