Will NT Server Bail Under Vendor Pressure?

Theories of Law While it's widely believed that a server-side case will be made against Microsoft, fundamental questions remain about whether that case will prevail in court. The 1995 Consent O rder, for example, contains specific language saying NT and NT Advanced Server are "not covered" under the agreement. Such language would seemingly make it difficult, if not impossible, for Justice to take the kind of narrow and more easily argued enforcement action it began with the browser. Reback, however, says that when the Consent Order was appealed, NT was recognized as falling under it. He adds that the order encompasses any Windows successor desktop--so, to the extent Microsoft pursues plans to create an NT-Windows98 single operating system successor and GUI, the order applies. "And since there is no difference in NT Server and Workstation, I think they'd be hard-pressed to argue that the order does not apply," says Reback. Microsoft, however, insists that NT Server and Workstation are "tuned" to accomplish different tasks. At the recent Ralph Nader "Appraising Microsoft" conclave in Washington, the majority of antitrust lawyers and economists attending suggested theories of tying, monopoly leve rage and essential facility as the optimum avenues to keep Microsoft within bounds. A December ruling called for further legal discovery on Microsoft's bundling practices, finding that the 1995 Consent Order, negotiated by Microsoft and Justice, was so ambiguous that it couldn't readily be used to hold Microsoft in contempt or compliance--especially when antitrust law prohibits product tying. Reback told Network Computing that to the extent it is clear Microsoft intends to merge Windows95 and NT, the appropriate claim would be "monopoly maintenance" and "if that's not the case, then it's still attempted monopolization." Unlike other legal theories for which case law is split, Reback says the law prohibiting monopoly maintenance and attempted monopoly is well-established and clear. "In very traditional antitrust analysis, if you have 30 percent or 40 percent of the market and you are engaged in practices that make it likely you will monopolize the market, your conduct is illegal," he explains. "The purpose is to catch it at its incipiency, to catch problems that would lead to monopoly if not checked." Other legal scholars think a tough battle awaits anyone trying to argue monopoly maintenance and attempted monopolization on the part of Microsoft. Lloyd Constantine, former chairman of the Antitrust Task Force of the National Association of Attorneys General, says it is difficult to demonstrate that a company comes "dangerously close" to having the power to control price or exclude competitors in a market--which is needed to prove attempted monopolization. There are cases, he says, when a company held 100 percent of a market, yet wasn't considered in that category because its hold on the market was so fragile. The other problem, Constantine says, is that software markets are so fleeting that by the time a challenge is successfully brought, the market has transformed into a new one. Constantine, who says he takes no particular stand on Microsoft's actions, argues instead that if the government wants to pursu e Microsoft and any other company that takes advantage of the kind of market snowballing now known as "network effects," Congress needs to rejuvenate the Sherman Antitrust Act. Constantine says that through judicial interpretation and administrative inaction that began in the early 1980s, the Sherman Act has become a somewhat blunt weapon. He would like to see Congress sharpen it by remedying the current split in judicial opinion over monopoly leveraging. His suggestion is that Congress votes to clarify that monopoly leveraging--that is, taking a monopoly in one market and leveraging it to your competitive advantage in another--is illegal.

Industry Briefs By Kelly Jackson Higgins