Microsoft Enjoys Monopoly Power...

In uncommonly harsh language, the court hands Gates a devastating defeat. Is Microsoft mortally wounded?

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It was 4:30 p.m. Friday when an Antitrust Division lawyer called from the courthouse, a hot-off-the-presses copy of the Microsoft decision in his hands. "What does it say?" asked an eager Joel Klein, head of the division, who was waiting in his conference room with the government's trial team. "I'm on page 16," replied the lawyer who was speed-reading his way through, "and it says they're a monopolist!" "Great!" said Klein. "Keep reading!"

If you're scoring at home, you can write Microsoft Corp. next to Standard Oil and AT&T on your list of the 20th century's great monopolies. When the Justice Department squared off against Bill Gates & Co. in a Washington courtroom, it was no secret that things went badly for Bill. But even so, the findings of fact that Judge Thomas Penfield Jackson handed down were stunning in their breadth and their certainty: a blunt 412-paragraph j'accuse that nails Microsoft not only on the two most critical issues--that it has monopoly control over PC operating systems and that it wields that power in ways that harm American consumers--but on virtually every count brought against it.

It's actually hard to imagine how, for Microsoft, it could have come out any worse. The ruling carefully lays out the factual basis for the major antitrust violations that seem certain to follow. And it paints an exceedingly dark portrait of one of America's most admired companies. The Microsoft of Judge Jackson's narrative is a deep-pocketed bully that uses "its prodigious market power and immense profits to harm" companies that presume to compete with it. And it presents Gates as a law-flouting monopolist who makes a "threat" to one rival considering getting into the software market and "berate[s]" and then "retaliates" against an executive from another company who dares to criticize Windows.

As the sweep of Judge Jackson's ruling became clear, the anti-Microsoft camp had trouble containing its glee. James Barksdale, the folksy former Netscape CEO who testified at the trial that Microsoft tried to suffocate his company, hailed the findings of fact as "an 11 on a 10-point scale." Michael Morris, general counsel for Sun Microsystems, crowed that "Microsoft is in deep, deep trouble, and they know it." Klein, flanked by Attorney General Janet Reno at a celebratory press conference, declared that it "shows once again that in America, no person and no company is above the law.

Microsoft, for its part, deployed legions of spinners to argue that Jackson had it all wrong. The company had broken no laws and done no harm to consumers. The judge failed to appreciate the dynamic nature of the software business, which makes any dominant position inherently short-lived. The only lapse in Microsoft's genetic self-assurance was a video press release the company rushed on the air immediately after the ruling came down. "We hope we can find a way," Gates declared, "to resolve this and put it behind us." For a moment, he seemed to be waving the white flag of settlement.

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