Makki Posted December 6, 2002 Share Posted December 6, 2002 Judge Compares Microsoft's Acts To Skater Knee-Capping BALTIMORE -(Dow Jones)- A federal judge compared the acts by Microsoft Corp. (MSFT) as outlined in a private antitrust lawsuit filed by archrival Sun Microsystems Inc. (SUNW) to the knee-capping of figure skater Nancy Kerrigan arranged by competitor Tonya Harding. "Isn't there a societal value in being able to participate in a market undistorted by anticompetitive acts," asked U.S. District Court Judge J. Frederick Motz Thursday. His comments came in the third and final day of hearings on Sun's request for a preliminary injunction that would require Microsoft to carry Sun's Java programming language in Microsoft's own Windows personal-computer operating system software. Motz's questions were addressed to Microsoft's University of Chicago economist Kevin Murphy, who said the Java "must-carry" remedy couldn't be justified economically. The remedy would undermine incentives for Java to distribute the program itself and for Microsoft to invest in its own products, hurting consumers, Murphy said. "So the only value the Chicago School places on antitrust is you can sue to get the trophy, but you can't have the satisfaction of competing to show your product is better," asked Motz. Motz characterized Sun's proposed remedy as a "Groundhog Day" solution, alluding to the movie in which a character is stuck in time to relive the same Groundhog Day over and over until he finally redeems his bad behavior. Imposing Sun's remedy on Microsoft wouldn't be judicial engineering of the market but would be "un-engineering the market, a Groundhog Day remedy," Motz said. He cautioned that he would have to carefully examine the facts to see if such a remedy is warranted. Sun's case is one of four private antitrust lawsuits that build off factual findings from the Justice Department's 1998 antitrust case, the settlement of which was approved in Washington last month. Microsoft was found to have abused the monopoly its Windows personal-computer operating system software has in the market by targeting Sun's Java and the Netscape Navigator browser. Sun's private lawsuit could potentially seek billions of dollars in damages. But with the trial likely not to get underway for a year or more, Sun wants Microsoft in the meantime to distribute its Java programming language in Microsoft's Windows program. The two companies had such an arrangement, but it was disrupted by a bitter contract dispute. Sun says it needs to be in Windows so it can compete with Microsoft's emerging .NET Framework. Both Java and .NET are platforms for an emerging market of so-called " distributed" computing over mobile phones, hand-held devices and network servers, as well as the computer desktop. But Murphy told Motz that consumers wouldn't be helped by attempts to tilt a market distorted by anticompetitive acts back in the other direction. Monetary damages would be more appropriate, he said. "A punishment is not synonymous with a remedy," Murphy said. A remedy should " make the world as good for consumers as possible." He also questioned why Sun hadn't been more aggressive in distributing Java after its deal with Microsoft to carry Java in Windows broke down. In comparison, he cited the examples of RealNetworks Inc. (RNWK), Adobe Systems Inc. (ADBE) and Apple Inc. (AAPL), which broadly distributed their software through downloads and other means. Judge Motz interrupted Sun's closing arguments to raise a key question: whether harm to Sun is so imminent that a preliminary injunction is warranted. Earlier in the trial, Motz asked whether Sun would consider simply going straight to a trial on the Java must-carry remedy, which would not require a finding of imminent harm. "Suppose I did not think I could find evidence there is imminent threat" that the new market for distributed computing could tip to Microsoft, Motz asked Sun attorney Lloyd R. Day Jr. "Would there be sufficient harm to Sun of being deprived of the opportunity to compete, in the context of evidence that you have been mugged by Microsoft and the mugging made some difference?" Day responded that there is plenty of evidence of harm. "What's tipping today, right now, are the choices (software) developers are making, the expectations they have about which platform will be prevalent," Day responded. Motz also wrestled with the question of whether an antitrust remedy can be imposed only for economic reasons, rather than social or moral ones. While capitalism is about making money, "it is also about pride of product," Motz said. "There is something that seems to be wrong if you are deprived of the opportunity to say 'my product was the better one.' " But he added, "I'm not all that sure that's cognizable under the law." Day responded that antitrust remedies are indeed meant to ensure that innovative products can reach consumers rather than being blocked by anticompetitive acts. But Microsoft attorney David Tulchin said that neither Sun's Java or Microsoft's .NET are in danger of disappearing over the next few years. Microsoft won't even begin automatically distributing it on all copies of Windows until 2004, which means that the software won't be ubiquitous until 2007 to 2009. "It's a long time from now," Tulchin said. .NET "presents no imminent, irreparable injury" that would warrant a preliminary injunction. Antitrust laws are "not about social policy of protecting a competitor." When judge Motz sternly warned Tulchin that Microsoft had been found to have " substantially foreclosed" distribution of Java by anticompetitive acts, Tulchin added that he wasn't arguing Microsoft shouldn't have to pay damages. "But that's a little bit different than a motion for a preliminary injunction, " he said. It wasn't clear late Thursday when Motz would issue his decision. Later, Motz indicated he hopes to decide the case soon. But he expressed doubts about whether he could grant Sun's request, given what he saw as the lack of imminent, irreversible changes in the market that would warrant a preliminary injunction. "When I first looked at the case, I thought that if I didn't act by December, the market would tip by January," he said. "On this record, I can't find that." 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