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June 14th, 2000

[1:30 PM] Microsoft Appeal Represents All Or Nothing Approach
by Wes George

Microsoft's stock jumped three dollars this morning due to the announcement late yesterday that the US Court of Appeals eagerly snatched up the software monopoly's request for an appeal. The DOJ had hoped to "fast track" the case to the US supreme court, but had to wait until Microsoft filed for an appeal with the appellate court first.

Within hours of Microsoft's request for an appeal the court responded, "in view of the exceptional importance of these cases all motions and petitions" will be heard by the full court. Many observers were shocked that the appellate court jumped to hear the case en banc rather than first waiting for a three-judge panel to review the merits.

The appeals court will convene a seven-judge panel of four Republicans and three Democrats to hear the case. Three other judges recused themselves.

This settles an acrimonious debate between the Feds and Microsoft's leadership over where this case should go next. The Department of Justice and the 19 states accused Microsoft of dragging its feet by not joining the government in asking for a fast track to the Supreme Court.

Meanwhile, Microsoft is busy building a case against Judge Jackson's court. According to the Wall Street Journal, the company's motion for an appeal, "recounts a litany of legal and procedural errors that the company says Judge Jackson committed in the case and asks his entire ruling be stayed from taking effect while it is being appealed." The company will attempt to turn the focus away from the merits of the case to challenge the legal process itself.

Microsoft's entire legal strategy rests on the company's hope for a favorable ruling from the appellate court which has been kind to Microsoft in the past. Steve Ballmer told Jim Lehrer on PBS's News Hour Monday night that there is no back-up plan -- it's all or nothing.

The Mac Observer Spin: The chances of this case being heard directly by the busy Supreme Court was almost nil. Most legal experts contend that the Supreme Court would have rejected any petition to take the case until a lower court refines and clarifies the arguments coming from both sides.

Since the Finding of Facts Microsoft knew a conviction was coming but they refused to negotiate in good faith with the government to reach a compromise to stave off a guilty-as-charged verdict.

Instead Microsoft's ego-driven leadership has decided to gamble it all -- the confidence of it developers, all the deals it has with its business partners, the jobs and lives of its employees and the value of its shareholders' investments -- on the roll of the appellate court dice.

These Redmond guys play rough with other people's lives, but why not? Microsoft's leadership is already rich beyond belief. They don't care what happens to all the little people that make their empire run. It's more about their egos than the daily reality the demoralized MS workers must face.

With naive arrogance, Microsoft is gambling that the appellate court, once friendly to the company, will rule that way yet again. However, forecasting court rulings is about as close to a crap shoot as one can get. It's more likely any clarifying of the facts around this case during the appeal will only expose more of what Microsoft's lawyers so ineptly attempted to obscure in the first trial. That's why Microsoft will attack Judge Jackson courtroom manners and procedures while trying to avoid the relevant facts which are dead set against the company.

What ever the outcome, Microsoft is already deadmeat. The debate at the appellate court will be merely whether the carcass should be butchered. The likelihood of a total reversal of Judge Jackson's ruling is negligible.

No matter how the remedies get reworked once Microsoft's criminal conviction has run out of appeals the company has a decade of multiple billion dollar class action civil suits just waiting to be filed. These civil suits need only for Microsoft to be found guilty to proceed and that has already been established to a degree that even the most MS friendly judges on the appellate bench will be loathe to overturn.

Microsoft's fate is high tragedy at its finest. One highly probably ten-year scenario for the software monopoly can be gleaned from a review of the legal woes tobacco companies have endured.

Microsoft



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