18-Jul-01 - Microsoft today asked the Court of Appeals to re-hear that part of their anti-trust appeal dealing with commingling of code between Windows 98 and Internet Explorer.

Legal experts say the court is unlikely to agree to re-hear any of the appeal due to the way the case was conducted. Normal procedure is for three judges to hear the appeal, and if a request to re-hear all or part of the case is accepted all 7 judges participate. In this case all 7 judges have already heard the entire case, and their decision was unanimous.

Analysis

[ Update: The Department of Justice says it will not ask for an injunction preventing shipment of Windows XP (see 9-Aug-01 below), but the wheels set in motion over this issue continue to turn, so we're keeping the chronology updated. ]

Windows XP, due out in October, finally unites the Windows95/98/Me line and the Windows NT/2000 line with a single code base. It is critical to Microsoft's future because it is the platform for their "bet the company" .NET initiative.

Windows XP was designed under the presumption the Court of Appeals would completely overturn Microsoft's anti-trust conviction. Since the Court of Appeals unanimously upheld every count of the conviction, this is a serious problem. Windows XP contains a lot more of precisely the behavior that got Microsoft hauled into court in the first place.

Should either the Department of Justice or a competitor succeed in getting a court injunction holding up shipment of Windows XP, that would be devastating to Microsoft. It would demonstrate just how much clout the courts have given to the DoJ and to Microsoft's competitors. It would seriously interrupt Microsoft's revenue flow, cause a serious drop in their stock price, and demonstrate that all phases of the .Net initiative are highly vulnerable. Unfortunately for Microsoft, an injunction is a real possibility.

Here is the action so far:

• 27-Jun-01 - The same day the Court of Appeals issued it's guilty verdict, Microsoft dropped Smart Tags from Windows XP. This controversial feature was just about certain to get Microsoft hauled into court again.

• 11-Jul-01 - Microsoft announced concessions to the OEMs, allowing them some flexibility in placing the Internet Explorer icon in Windows XP and removing user access to Internet Explorer. A careful reading shows the conditions are vague and concede nothing worthwhile. It's just a ploy to say, "See, were cooperating with the judgment, so there's no need to hold up shipment of Windows XP", without actually giving up much of anything. Unfortunately for Microsoft, it appears everyone can see this quite clearly

• 13-Jul-01 - The Department of Justice applied to the Court of Appeals to accelerate return of the anti-trust case to the District Court by dropping the 52-day period in which Microsoft can apply for a re-hearing before the court. Their logic is that since the entire Court, all 7 justices, heard the case, and the decision was unanimous, the court will not grant a re-hearing, so why wait?.

  It is obvious the DoJ wants the case back in court as soon as possible to give them time to request an injunction preventing shipment of Windows XP.

• 17-Jul-01 - Microsoft removed Java from Windows XP. Users who need the Java virtual machine to access Web sites can download it automatically. The reason for Microsoft's action is simple and obvious. Sun Microsystems is one of the most likely companies to launch a private anti-trust action against Microsoft, but if there's no Java in Windows XP, then Sun can't ask for an injunction preventing shipment.

• 18-Jul-01 - Microsoft applied to the Court of Appeals for a re-hearing on the matter of commingling code, one of the very most damaging parts of the judgment. Since it is very unlikely the Court of Appeals will agree to re-hear this item, it's seen as a delaying tactic rather than real hope for Microsoft. They got it in so quickly so the Court would have to consider it before they simply agreed with the DoJ acceleration request (see above). The longer the Court takes to consider the matter, the less likely the DoJ can stop shipment of Windows XP

• 19-Jul-01 - The Court of Appeals asked the Department of Justice to respond to Microsoft's request for re-hearing. This will take a few days, but legal experts still expect the re-hearing to be denied.

• 23-Jul-01 - InterTrust sued to halt shipment of Windows XP by amending it's existing lawsuit charging Microsoft with violation of it's patents on secure music and video delivery.

• 25-Jul-01 - Rumors surface that Microsoft is attempting to accelerate development of Windows XP to get it out as much as a month before the official release date in an attempt to beat an injunction. The reasoning is that the courts would have a hard time demanding a recall.

• 26-Jul-01 - The Department of Justice submitted their response to Microsoft's request for a re-hearing, and it all but accuses Microsoft of a pure stall tactic.

• 27-Jul-01 - Microsoft made it clear in a press conference there will be no settlement. Monday's talks with the DoJ ended without scheduling further talks, indicating the DoJ stood firm on their advantage. Microsoft has once again stated they will win in court (reported in Los Angeles Times).

• The EPIC (Electronic Privacy Information Center) filed with the Federal Trade Commission for an injunction against shipment of Windows XP based on privacy issues with .NET.

• 1-Aug-01 - The Court of Appeals denied Microsoft's request for a re-hearing (as expected). The Court also denied the Department of Justice's request to fast-track the proceedings. This will negatively impact the DoJ's ability to get an injunction before the ship date. Still possible, but more difficult. More on CNet News.

• 7-Aug-01 - Microsoft has appealed to the U.S. Supreme Court, asking it to overturn the verdict of the Court of Appeals. This is considered by legal experts to be just a delaying tactic, since the Supreme Court is highly unlikely to hear the case at this time.

  Microsoft is appealing based on the CoA finding judge Jackson to be biased. Hmmm. The way I remember it, the CoA said there was an "appearance" of bias in the penalty phase of the trial, but no evidence of actual bias was found. They considered the "appearance" sufficient to void the punishment and send it for re-trial. Microsoft is now trying to project this "appearance" in the penalty phase back to "actual bias" in the finding of fact phase.

• 7-Aug-01 - Microsoft has petitioned the Court of Appeals to take no further action until the Supreme Court has answered their appeal. This makes it all the more obvious they're just playing for time to get XP out the door in full knowledge it's illegal. They know if anyone can get to a judge with jurisdiction an injunction will be issued.

• 9-Aug-01 - The Department of Justice will not attempt to stop the release of Windows XP (unless they change their mind). Their reasoning is simple and logical. First, the proof of harm standard set by the Court of Appeals is difficult to meet in such a short time. Second, The PC industry claims it's depending on XP to bring it out of a slump and the DoJ doesn't want to be blamed for keeping them there. Third, should the DoJ not meet the standard for proof of harm in so short a time, and a requested injunction is denied by the District Court, that would be embarrassing to the DoJ.

  Another reason could be to simply let Microsoft hang themselves. XP includes much more just like what got them hauled into court in the first place. Continuing bad behavior after the Court of Appeals verdict may be quite handy for getting a really harsh penalty. It is clear the DoJ is taking this case very seriously. They hired Phil Beck, a trial lawyer equal in stature to the Clinton DoJ's David Boies (the two faced off over the Florida election - Beck won).

• 10-Aug-01 - The Department of Justice petitioned the Court of Appeals to not hold up district court proceedings until the Supreme Court has ruled whether or not it will hear Microsoft's appeal. Microsoft had asked these proceedings be suspended pending that ruling. The DoJ cited the importance of settling this case quickly to remove uncertainty from the marketplace and due to the amount of damage an unrestrained Microsoft can do in even a short time.

  The Supreme Court is expected to rule on this matter in September, and is expected to decline to hear Microsoft's appeal.

• 14-Aug-01 - Microsoft again requested of the Court of Appeals that they delay any further action until the Supreme Court rules whether or not to hear their appeal (they are expected to rule in early October). This company is getting really desparate!

• 17-Aug-01 - As expected, the Court of Appeals told Microsoft there would be no delay. The court added, "It appears that Microsoft has misconstrued our opinion". Well, surprise! Random selection of a new District Court judge will now be made, and retrial of the panalty phase will begin in about a week.

• 24-Aug-01 - A new judge was chosen from the DC Circuit Court pool by computerized lottery. The judge appointed to retry the tying issue (if the Department of Justice decides to do so) and set the final remedy is Colleen Kollar-Kotelly. Judge Kollar-Kotelly has no significant previous experience in anti-trust cases, but is married to a lawyer who defends corporations against the government in anti-trust cases. Not being privy to their family life, I will not issue an opinion as to whether this will be a factor in any way.

• 24-Aug-01 - Microsoft officially released Windows XP to manufacturing with a big to-do in Redmond. The press was escorted off the campus as soon as the official program was over, probably for fear CEO Steve Ballmer might dance again.

• 29-Aug-01 - Judge Kollar-Kotelly let it be known the case would proceed on an accelerated schedule. The DoJ and Microsoft are to submit a joint proposal for what information they will need from each other and for the schedule to complete the case. The proposal is due 14 Sep 01, and a hearing is scheduled for 21 Sep 01 to formalize the schedule. If the DoJ and Microsoft cannot come up with a joint proposal, separate proposals will be required.

• 30-Aug-01 - The Department of Justice petitioned the Supreme Court to not hear Microsoft's appeal. They referenced the Court of Appeals statement that "It appears that Microsoft has misconstrued our opinion" It is still thought highly unlikely the Supreme Court will agree to hear Microsoft's appeal. InfoWorld article.

• 06-Sep-01 - The Department of Justice announced it would not seek a breakup of Microsoft, nor would it seek to re-argue the issue of "tying" the browser to Windows. This will allow the court to proceed immediately to the penalty phase. More on this subject and analysis in our news item Justice Drops Microsoft Breakup.

• 06-Sep-01 - Anti-trust charges have been filed in South Korea with the intent of halting distribution of Windows XP in that country. A major ISP (Internet Service Provider) has charged that the inclusion of Microsoft Instant Messaging in Windows XP competes unfairly with other companies that offer Instant Messaging services.

• 07-Sep-01 - California and New York announced they would seek remedies beyond those so far proposed by the Department of Justice, and that these remedies would be targeted to force changes in Windows XP. Many consider Windows XP to include significant anti-trust violations.

- Andrew Grygus