Microsoft Case Tried in Court of Public Opinion

Battling the world’s most powerful software company is a daunting enough task for the Justice Department and 20 states, including California, in their landmark antitrust suits against Microsoft Corp.

But the government may find it equally important--and just as tricky--to wage the battle for public opinion.

Experts say it’s critical for the government to succeed on both fronts in a case that many believe will ultimately rest on one thing: What is good for the consumer?

That issue used to be clear-cut in cases against, say, fixing the price of milk. Consumers prefer lower prices. But the emerging economic forces of the Information Age often defy such obvious conclusions, clouding legal issues and complicating efforts to sway public opinion.

In this case, for instance, the government faces the predicament of convincing consumers it is acting in their interest even when it is trying to force Microsoft to stop giving away a product.

The Justice Department’s primary weapon is the widespread acceptance in the courts and across public opinion, that competition is good. To the extent Justice officials can show that Microsoft has given away its Internet browser and used its monopoly power to throttle competitors, they will win important points.

Of course, courts make judgments on antitrust cases based on principles of law. But regulators themselves are heavily influenced by prevailing public sentiment. Under President Clinton, there has been a resurgence in antitrust activity. But experts say that trend could quickly reverse if the government loses broad public support for its actions.

Even government officials acknowledge that articulating this particular case to the public poses significant problems.

“It is important for the government to explain its stake in this litigation so that taxpayers understand what we’re doing,” one federal official said Tuesday. “But the antitrust and technological concepts in this case are challenging.”

The government accuses Microsoft of illegally seeking to monopolize the browser market by “tying” sales of its browser to its Windows operating system, a market in which it has a monopoly.

Experts point out that this case could be tough for Justice officials to win because the courts tend to assume that new technology is good for consumers and shouldn’t be stifled.

“Unless you prove that an innovation truly goes backward, actually degrades the product, judges won’t be comfortable deciding whether that [browser] should go into the software program,” said Sam Miller, the San Francisco attorney who led the Justice Department’s previous investigation of Microsoft in the early ‘90s.

If Microsoft wins the first battle, Justice officials must then come back and argue that the anti-competitive results of Microsoft integrating the browser outweighed any positive benefits to consumers. But courts would be reluctant to accept such an argument because it would involve “making new law,” said Tom Rosch, a San Francisco lawyer with Latham & Watkins and antitrust expert.

When Justice officials argued decades ago that IBM Corp. put functions into its computer software that discriminated against other software companies, said Rosch, “the court said we aren’t going to second-guess engineers as long as there are some efficiency reasons for including the functions.”

In terms of fighting for public support, Microsoft is arguably under greater pressure than the government because it cannot afford to lose the confidence of consumers. The challenge is considerable because Microsoft Chief Executive Bill Gates is the world’s richest man, and billionaires do not tend to be sympathetic figures. But despite the suits and the drumbeat of negative publicity over the last few months, Microsoft remains widely respected by consumers and Wall Street.

“Microsoft does fire the imagination in terms of a company that is innovative and has created tremendous wealth from very modest beginnings,” said Garth Saloner, a business professor at Stanford University.

Still, Saloner said he believes the Justice Department “will have considerable sympathy once the public is exposed to the full tapestry of statements and plans that Microsoft has made to thwart competition.”

In the meantime, many experts and analysts are scratching their heads about some of the Justice Department’s moves.

Many analysts said the government may have hurt its cause by seeming so eager to come to the aid of one company, Netscape Communications Corp. In a move that surprised many in the industry, the Justice Department asked the courts to force Microsoft to bundle two browsers, its own and Netscape’s, or none at all.

“That just blows my mind,” said Gordon Eubanks, chief executive of Symantec Corp., a maker of software utilities. “So now it’s OK for two companies to have a monopoly as long as it’s created by the Justice Department?”

Eubanks pointed out that there are numerous other browsers that would be excluded in such a deal, even though none of these companies has significant market share compared with Netscape and Microsoft.

Gates compared the Justice Department’s demand to requiring Coke to ship two cans of Pepsi with every six-pack, a simple analogy likely to resonate with consumers.

Another thrust of the suit is aimed at forcing Microsoft to loosen restrictions on computer manufacturers so that they have more control over what software they load on their machines, and what Internet services consumers see first when they turn the computers on for the first time.

But computer manufacturers have insisted they don’t want such assistance, and top executives at the companies have lined up in support of Microsoft. Rivals say that’s because of Microsoft’s enormous influence.

“The computer makers are scared and intimidated by Microsoft,” said Mike Morris, general counsel at Sun Microsystems. “They are whipped people, and if they lose their Microsoft license, as big as they are, they are out of business tomorrow.”

That is the Justice Department’s contention as well. But officials acknowledge it has been an awkward case to make with the public.

Perhaps the greatest predicament for the government is overcoming Microsoft’s persistent argument that it is helping consumers by adding new features--including its Internet browser--to its Windows operating system.

The Justice Department argues that the company is doing so only to run Netscape out of the market. The point is so critical that many of Microsoft’s enemies called reporters to support the government’s claim and to compare Gates and Microsoft to earlier antitrust targets, including Standard Oil.

“It’s important for the public to understand what Bill Gates and Microsoft are doing,” said Larry Ellison, chief executive of Oracle Corp. “Bill wants everybody to believe he’s Edison when he’s really Rockefeller.”

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Miller reported from San Francisco; Helm reported from Seattle.