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Analysis: The Microsoft anticlimax

Judge's ruling sets groundwork for months, if not years of appeals.

After nearly two years of legal wrangling, Judge Thomas Penfield Jackson's decision to throw the book at Microsoft rates as something of an anticlimax.

Microsoft had braced for the worst ever since Jackson issued a stinging rebuke last November, ruling in the so-called "findings of fact" stage of the trial that the software maker was a predatory monopolist that stifled competition.

And as they have all throughout the course of this landmark dispute, lawyers for both sides viewed Jackson's opinion through a Rashoman-like prism where Microsoft and the government continued to offer widely divergent interpretations of the same evidence.

Gleeful Justice Department and state officials seized upon the conclusions of law as vindication, calling it a benchmark victory in the history of antitrust enforcement. Flanked by Attorney General Janet Reno and Iowa Attorney General Tom Miller, the DOJ's antitrust chief Joel Klein said in a Washington press conference the decision would "benefit consumers and stimulate competition and innovation in the high tech industry."

But clear across the country at the company's Redmond headquarters, Microsoft took a distinctly different view. Officials viewed Jackson's 43-page conclusion as just another skirmish in a long-running battle that began when the government originally filed its lawsuit in May 1998. The company, which plans to appeal against the ruling, also pointed out that Jackson dismissed government allegations that Microsoft had closed off Netscape's ability to distribute its Internet browser. Indeed, Jackson noted that Netscape was able to distribute about 160 million copies of its Navigator browser software.

That appeal means this case could drag on for months, if not years, before a final determination. Although Microsoft and the government theoretically still have room to reach an out-of-court resolution, the breakdown of settlement talks late last week underscored the difficulty in bridging the gap between the two sides.

On Saturday, court-appointed mediator Judge Richard Posner said in a prepared statement that his "quest has proved fruitless."

Judge Posner, who first convened his meetings with Microsoft and the government on November 30, said "it is apparent that the disagreements among the parties concerning the likely course, outcome and consequences of continued litigation, as well as the implications and ramifications of alternative terms of settlement, are too deep-seated to be bridged."

Although the immediate impact on Microsoft is likely to be limited, the company is going to have its hands full dealing with the public relations fallout. Indeed, company CEO Steve Ballmer said that in coming weeks he plans to explain the company's position to its customers.

This is not a road trip he's likely looking forward to making.

Microsoft has now been found by a court to have maintained its monopoly by anti-competitive means, violating antitrust law by unlawfully tying its Internet Explorer Web browser to the Windows operating system.

Peppering his 43-page ruling with lively adjectives to describe Microsoft's behavior, Jackson said Microsoft had pursued a coordinated course of action that, when viewed in its totality, revealed the "full extent of the violence that Microsoft has done to the competitive process." Elsewhere, Jackson said Microsoft had "mounted a deliberate assault upon entrepreneurial efforts" and had "placed an oppressive thumb on the scale of competitive fortune."

The penalty phase of the case comes next. But in his ruling, Jackson kept trial watchers guessing by leaving no hint about remedies he may decide to impose upon Microsoft. That process is expected to take several months to complete in which both sides will submit what they believe the remedies should be, ranging from a slap on the wrist to a breakup of the company.

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