Can justice cope with technology?

Every new year brings a wave of predictions about the technology innovation, trend, or event that will rise above all else.

Most prognostications focus on the cool stuff like 3G networks or cell phones that double as PDAs. But if you really want to know what'll be big this year, forget about all that stuff and focus on this: The outcome of the United States v. Microsoft will overshadow all else-not just for the technology business, but for businesses that use technology, too. Need proof? You needn't look further than three documents that may prove to be at the center of a defining moment in American business.

The three documents are: the U.S. Appellate Court's opinion that was handed back to the U.S. District Court on June 28, 2001, the proposed final judgment and remedy from nine states and the District of Columbia (the "non-settling states"), and the proposed final judgment and remedy to which the Department of Justice, Microsoft and nine other states (the "settling states") have agreed. These documents do more than provide a backdrop for the final outcome. They may also signal a new approach to business regulation by governments that may be reluctant or ill-equipped to keep monopolies from violating antitrust laws. The result: Businesses and consumers that depend on technology products will be forced to bear the opportunity costs of lost innovation and choice.

The Enron debacle, and the possibility that the present administration may have gotten a little too cozy with big business, simply underscores a long-held public perception that the people's interests in these matters aren't being served--and maybe not even being considered. The Appellate Court, apparently aware of the need to protect its reputation as an unassailable check in the system of checks and balances, stated that "the partially retroactive disqualification [of Judge Thomas Penfield Jackson] minimizes risk of injustice to the parties and the damage to public confidence in the judicial process." And now, the steps U.S. District Judge Colleen Kollar-Kotelly takes in resolving the differences between the settling and non-settling remedies will either help restore or further shake public confidence.

But by its own admission, the judicial branch is already having a difficult time coping with the technology business. In its June 2001 opinion, the Appellate Court reminds us of its concerns by reflecting on a previous decision when it concluded that Windows 95 and Internet Explorer were indeed integrated. The court wrote: "We cautioned that our conclusion that IE and Windows 95 were integrated was 'subject to reexamination on a more complete record.' To the extent that the decision completely disclaimed judicial capacity to evaluate 'high tech product design,' it cannot be said to conform to prevailing antitrust doctrine (as opposed to resolution of the decree-interpretation issue then before us)."

Also, according to the Appellate Court's opinion, "By the time a court can assess liability, firms, products, and the marketplace are likely to have changed dramatically. This, in turn, threatens enormous practical difficulties for courts considering the appropriate measure of relief in equitable enforcement actions, both in crafting injunctive remedies in the first instance, and reviewing those remedies in the second. Conduct remedies may be unavailing in such cases, because innovation to a large degree has already rendered the anticompetitive conduct obsolete (although by no means harmless). And broader structural remedies present their own set of problems, including how a court goes about restoring competition to a dramatically changed and constantly changing marketplace."

Based on antitrust case precedence, one of the three major objectives of any remedy to an antitrust case is to undo anticompetitive consequences to restore competition to the damaged market. But nobody has any illusions about restoring competition in the market for Intel PC (meaning "desktop") operating systems.

That game is over. By the time any remedy has any measurable effect on any market in which Microsoft participates, the relevance of the desktop operating system market in the greater landscape of digital appliances may indeed be greatly diminished. Compounding the problem for the judicial branch is that relieving a digital market-or any market--of a predatory monopolist is a time-consuming process.

In fact, it was an attempt to condense that process--Judge Jackson's misguided decision not to hold an evidentiary hearing--that is partially responsible for the Appellate Court vacating his remedy and the reason this case has dragged on. Saying that the Supreme Court "has recognized that a full exploration of facts is usually necessary in order [for the District Court] to properly draw [an antitrust] decree so as to prevent future violations and eradicate existing evils," the Appellate Court cites a precedent from the antitrust case of United States v. Ward Baking Co. That such an important antitrust precedent escaped the notice of a district court judge strikes me as a shameful failure of Antitrust 101.

On the other hand, as the rapid pace of technology-induced change spreads beyond our industry into others (especially micro-economies like financial services and entertainment), we face a grim reality: Under the present system, justice and technology have become opposing forces. Short of a miraculous evolution in business ethics (unlikely), governments of free market economies must not only adapt, but also send clear messages.

What do you think? Must the judicial process be completely reformed in order to deal with the digital economy? What steps could be taken? Share your thoughts with your fellow readers at ZDNet TechUpdate's Talkback, or write directly to david.berlind@cnet.com.

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