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June 21, 2000
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Microsoft May Advance With Web Strategy
While Appeal Is Pending, Jackson Says
By JOHN R. WILKE
Staff Reporter of THE WALL STREET
JOURNAL
WASHINGTON -- In a surprise setback for the government, U.S. District
Judge Thomas Penfield Jackson suspended restrictions on Microsoft Corp.'s business
practices while the company's appeal of his antitrust ruling is
pending.
 The move means that Microsoft doesn't have to abide by Judge Jackson's
earlier order imposing sweeping business restrictions until appeals are
exhausted, possibly in a year or more. Microsoft foes fear that unless the
courts act quickly, the company could have time to consolidate its market
power and extend it into new Internet markets -- precisely what the case
sought to prevent.
To speed the appeal, Judge Jackson Tuesday certified the case for direct
review by the Supreme Court, finding that it is "of general public
importance to the administration of Justice," as required by the Expediting
Act, a little-used law that offers a fast track to the high court for
extraordinary federal antitrust cases. The Supreme Court can either take
the case, or send it to the appeals court here, where Microsoft won an
earlier round.
![[jackson]](/public/resources/images/trial06202000210150.gif)
Judge Jackson's order staying the restrictions from taking effect means
Microsoft can proceed unhindered with a new Internet strategy that it is
expected to announce later this week. The company had claimed that its new
strategy would be "doomed" under limits imposed by the court.
"This is bad for the rest of the industry," said George Cary, an
antitrust lawyer with Cleary, Gottleib and a former Federal Trade
Commission official. "It means there is no protection from Microsoft's
anticompetitive conduct while the appeal is pending."
The Justice Department issued a statement welcoming the direct appeal to
the Supreme Court because of the case's "importance to the American economy
and to all consumers." But the government's statement added that the
decision by the judge to stay his order pending appeal makes a final
resolution of the case even more urgent.
Microsoft officials said they were pleased. "It will allow our appeal to
go forward without unnecessary disruption for consumers and the high-tech
industry," a spokesman said. The company has said it will prevail on appeal
and argued that the case should be decided in the appeals court, not by the
Supreme Court.
On June 7, Judge Jackson ordered that Microsoft be broken into two
companies, one based on its widely used Office software and Internet
businesses, the other on Windows operating-system software, the source of
its monopoly power. He stayed that portion of the order from taking effect,
however, until a year after Microsoft had exhausted all appeals in the
case.
But the judge's earlier order didn't stay broad restrictions on
Microsoft's conduct that were to have taken effect Sept. 5, including
provisions that are intended to give personal-computer makers greater
freedom to install software from Microsoft's competitors, and others meant
to prevent pricing discrimination and retaliation by Microsoft against
rivals. Microsoft was also ordered to come up with its own detailed breakup
plan within four months.
Judge Jackson's ruling Tuesday suspended all of his June 7 order "until
the appeal is heard and decided … unless the stay is earlier vacated
by an appellate court."
Mark Popofsky, a former member of the Justice Department trial team,
expressed surprise at the judge's move but said it could speed the Supreme
Court's decision on whether or not to take the case.
"Now all they will have before them is the clean issue of whether to
take it, and not whether to grant a stay, and they are still in town for
another 12 days," he said. The high court's session will end shortly, and
doesn't resume until October, though it could take action before then.
Under Supreme Court procedure, if the court agrees to hear the case,
Microsoft's first filing would likely be due by mid-August, 60 days after
it filed an appeal notice with Judge Jackson. The government would then
have 30 days to respond, though either side could seek an expedited
briefing schedule.
Write to John R. Wilke at
john.wilke@wsj.com
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