Did MS execs document their legal missteps?

Legal experts believe a judge could well grant a preliminary injunction against Microsoft Corp. based on contents of internal memos presented as evidence by the U.S. Department of Justice.

But just how wide or narrow that injunction would be is open to disagreement.

In correspondence covering a period of more than two years, Microsoft (MSFT) officials used dramatic metaphors to describe the company's strategic relationship to rivals Netscape Communications Corp. (NSCP) and Sun Microsystems Inc. (SUNW) "We're going to cut off their air supply," a key executive said of Netscape.

That same official, Paul Maritz, Microsoft's vice president of platforms and applications, also declared that "Blunting Java momentum" is vital to "protect(ing) our core asset -- Windows. The thing we get paid money for."

	Here are excerpts from what the government believes are smoking gun memos from Microsoft.

Federal trustbusters have seized upon the above statements, and many similar ones made by top Microsoft brass in e-mails and other internal messages, as evidence in their high-profile antitrust lawsuit against the company, filed Monday.

Legal experts said some of the statements are highly damaging, while others are open to interpretation. While observers disagreed on the potential penalties Microsoft might face, they agreed that the federal judge in charge of the case is likely to grant the preliminary injunction being sought by the Justice Department.

Have an opinion on Microsoft's so-called 'smoking guns'? Add your comments to the bottom of this story.

What that will mean for the software behemoth is uncertain, since U.S. District Judge Thomas Penfield Jackson could grant some aspects of the injunction and not others, according to attorneys.

And the ultimate impact on the company's bottom line probably won't be a major one, since technology tends to move so much faster than the legal system, observers said.

Key issue isn't integration
The key issue, according to John Briggs, past chairman of the American Bar Association's antitrust law section, is that some of the statements appear to indicate the company would try to "maintain its operating system monopoly by cutting off (consumers') access to browsers that could potentially, in the future, replace the OS."

'Can you imagine sending some lawyer in to two of the biggest egos on God's earth (CEO Bill Gates and Senior VP Jim Allchin) to explain the antitrust issues and essentially challenge their strategic vision? It would have taken a personality as strong as theirs ... not to mention "cojones" the size of the moon.' -- Antitrust expert Rich Gray

Attempts to maintain a monopoly in a certain market by blocking competitors' access to that market are clearly illegal under U.S. antitrust laws, said Briggs, a partner at the Washington law firm Howrey & Simon.

"This is a much more crucial issue than the browser integration question" which has been the focus of many press reports on Microsoft's antitrust woes, he said.

But Briggs added that while the documents contain "colorful" statements, he said, "They don't amount to a slam-dunk for Justice."

Judge's discretion
The judge could evaluate the situation and conclude that the value provided to consumers by a bundled OS/browser package (he likened it to purchasing a car that includes seats, tires and a radio) outweighs the monopoly concerns raised by the bundling, Briggs said.

Another antitrust attorney described several of the statements in the DOJ's evidence as "devastating" to Microsoft's case.

A statement by one executive that it would be "very hard to increase browser share on the merits of IE4 alone," and that "it will be more important to leverage the OS asset to make people use IE instead of Navigator," provide strong evidence of unfair competitive actions by Microsoft, said Rich Gray, a partner at Bergeson, Eliopoulos, Grady & Gray, a San Francisco law firm, and a specialist in antitrust law.

Referring to Maritz's comment about blunting Java momentum, Gray said, "That's a devastating Sherman Act claim. It shows that they are trying to protect themselves from competition from an upstart technology."

Windows monopoly leveraged illegally?
The statements also show evidence of a potentially illegal leveraging of the Windows monopoly to jump-start Internet Explorer, he said.

'That's a devastating Sherman Act claim -- it shows that they are trying to protect themselves from competition from an upstart technology.' -- Rich Gray

In fact, the DOJ's evidence shows that as early as December 1996, key Microsoft officials were saying the key to success for the company's fledgling browser was their ability to tie it to the nearly-ubiquitous Windows OS.

Unless Microsoft were to "leverage Windows," Senior Vice President Jim Allchin wrote on Dec. 20, 1996, "I don't understand how IE is going to win. Maybe being free helps us, but once people are used to a product it is hard to change them ...Treating IE as just an add-on to Windows which is cross-platform loses our biggest advantage -- Windows market share."

Based on statements such as these, the judge is likely to grant some form of a preliminary injunction, Gray and Briggs said.

Lots of guts
Asked how Microsoft -- armed with a presumably savvy legal department -- could have gotten itself into such a situation, Gray said the company's brass may have come to believe it could do no wrong.

"Can you imagine sending some lawyer in to two of the biggest egos on God's earth (CEO Bill Gates and Allchin) to explain the antitrust issues and essentially challenge their strategic vision?" Gray said.

"It would have taken a personality as strong as theirs, and a person with an extraordinary grasp of both antitrust law and technology, not to mention cojones the size of the moon, to convince them."