Long appeals trek ahead for Microsoft

Posted: Thursday, September 28, 2000

SEATTLE -- With the U.S. Supreme Court opting not to immediately hear Microsoft's appeal of its antitrust case, the final say on whether the company will be broken up could be years away.

The high court ruled 8-1 on Tuesday to send Microsoft's appeal of its breakup back down to the U.S. Circuit Court of Appeals. The Justice Department had wanted the nation's highest court to hear arguments this winter and issue a ruling in the spring, but the Supreme Court granted Microsoft's request to send the case to the federal appeals court.

''This is a serious setback for the government,'' said William Kovacic, a George Washington University law professor and antitrust expert. ''Their strategy was to speed this case to resolution as quickly as possible. ... I think the government gambled and failed. At this point, I think the possibility of breakup is next to zero.''

Steve Ballmer, Microsoft's chief executive officer, said Tuesday that his company is not interested in delays.

''We're interested in speedy resolutions,'' Ballmer said in San Francisco. ''We want to get this thing moving as quickly as possible. We want to be able to be vindicated and move on.''

At the Justice Department, spokeswoman Gina Talamona said: ''We look forward to presenting our case to the Court of Appeals as expeditiously as possible.''

Only Justice Stephen G. Breyer went against the Supreme Court's decision. He said the court should hear arguments now because the case ''significantly affects an important sector of the economy -- a sector characterized by rapid technological change.''

That significant technological change could be the key to Microsoft's defense, and the additional year of appeals that Tuesday's ruling represents may help the company with its future plans.

''It's a different Microsoft and a different industry environment,'' Kovacic said. ''That's a powerful argument against the remedy Judge Jackson imposed.''

The Internet has become the primary computing tool for both individuals and businesses. But with the advent of cellphones and handheld devices that connect wirelessly to the Internet, the need to be tethered to a Windows-operated desktop computer is rapidly waning. Palm Inc. currently dominates the handheld computer market.

As Microsoft shifted gears in December 1995 to embrace the Internet, so did it smartly recognize the dawning wireless world, announcing in June its Microsoft.NET strategy. However, that strategy -- in which Windows may not be a launching pad to the Internet -- could put other companies on an even keel with Microsoft.

Following the Supreme Court's announcement, shares of the Redmond, Wash. company were up $1.44 to close at $62.69 on the Nasdaq Stock Market. Tuesday's prices were well off its 52-week high of $119.94 and barely off its low of $60.38.

Within hours of the high court's action Tuesday, the U.S. Circuit Court of Appeals for the District of Columbia ordered both sides to propose a schedule for filing briefs in the case. The court ordered Microsoft to submit its proposal by Monday afternoon, with a government response due the following Thursday.

The appeals court decided last summer the Microsoft case would be heard by the full appeals court, rather than a three-judge panel, thereby eliminating one level of appellate review.

The Supreme Court cases are Microsoft v. U.S., 00-139, and New York v. Microsoft, 00-261.

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