Microsoft Refutes Government’s Arguments, Urges Court to Dismiss Antitrust Allegations

REDMOND, Wash., Sept. 8, 1998 — Microsoft Corp. on Tuesday said that the government’s antitrust lawsuit against the company is fatally flawed and should be dismissed through summary judgment. The company said statements and other evidence provided by Netscape Communications Corp., the company on whose behalf the government brought its lawsuit, show that the government’s allegations are without merit.

In a detailed 48-page legal brief, Microsoft urged Federal District Court Judge Thomas Penfield Jackson to ignore the government’s last-minute attempts both to obscure the facts and to rewrite the lawsuit brought against the company earlier this year.

“The central facts of the case and the overwhelming body of law support Microsoft’s position. Based on the facts and the recent appeals court decision, we believe the case should be dismissed now, without a long and costly trial,”
said William H. Neukom, Microsoft’s senior vice president for law and corporate affairs.

“Nothing shown at trial can change the fact that customers benefit from Microsoft’s efforts to make Windows work well with the Internet. And nothing shown at trial can change the fact that Netscape has been enormously successful at distributing its Web browsing software to consumers. These facts undercut all of the government’s claims,”
Neukom added.

In its reply brief, Microsoft argued that the government had failed to address the company’s arguments in favor of summary judgment, and had instead attempted to create the appearance of disputed facts through extraneous arguments and new last-minute allegations that were not part of the government’s complaint filed in May 1998 — after nearly two years of investigation.

Microsoft’s brief said that the government is attempting
“to distract the court from the fatal defects in their claims by slinging as much mud as they can at the defendant and by giving prominence to numerous irrelevant facts in a desperate attempt to cloud the issues.”
(Reply brief, page 5)

The company argued that the government’s claims should be dismissed through summary judgment, because key elements of every claim are disproved by three central undisputed facts:

  1. The software code in MicrosoftWindows 98 that provides Web browsing functionality cannot be removed from the operating system without seriously degrading it;

  2. The inclusion of Microsoft Internet Explorer technologies in Windows 98 produces clear technological benefits for consumers and software developers that could not otherwise be obtained;

  3. Microsoft has not foreclosed Netscape’s or any other competitor’s ability to distribute its Web browsing software broadly to consumers.

Microsoft’s brief shows that Netscape’s own documents establish that the government’s claims are without merit. Indeed, Netscape has expressly confirmed Microsoft’s central point in this case, that Internet Explorer is part of Windows 98, and cannot be removed from the operating system without seriously degrading it. In a March 6, 1998, letter to Assistant Attorney General Joel I. Klein, Netscape’s counsel told the Department of Justice:

“We are totally unable to provide examples of files that can or cannot be deleted from Windows 98 since, as we discussed this week, it is our understanding that it simply is not possible to delete any portion of Internet Explorer, or of browsing functionality, from Windows 98 as presently configured without severely interfering with the operating system.”
(Reply brief, page 7)

Despite this clear statement from Netscape, the Department of Justice proceeded to file suit against Microsoft in May, representing to the court that it is
“technically feasible and practicable to remove Microsoft’s Internet browser software from Windows 98.”
(DOJ complaint, filed May 18, 1998, at 20.)

Microsoft’s brief also shows that evidence from Netscape proves that Netscape has had no difficult broadly distributing its Web browsing software to consumers. The brief points out that the government has conceded that computer manufacturers have always had the ability to license Netscape’s browser technology and pre-install it on their computers. Similarly,
“Microsoft devotes considerable resources to ensuring that applications such as Netscape Navigator are compatible with Windows, and plaintiffs do not dispute that Netscape’s Web browsing software works perfectly on Windows 98.”
(Reply brief, footnote 8, pages 23-24)

Microsoft also demonstrates that its cross-promotion agreements with Internet service providers, Internet content providers, and online service providers have not, in any way, foreclosed Netscape’s ability to distribute its browser software broadly to consumers.

“It is truly remarkable that plaintiffs continue to insist that Microsoft has done something to foreclose Netscape’s access to customers,”
the company’s brief says. (Reply brief, page 36) Microsoft’s brief cites a wide range of evidence collected from Netscape that refutes the government’s allegations regarding Netscape’s ability to distribute its products, but this evidence cannot be shared publicly due to the protective order imposed by the court.

Publicly available documents confirm the confidential evidence Microsoft has collected from Netscape. For example, the brief cites a Sept. 2 Netscape press release claiming that
“since July, Netscape estimates that more than 12.4 million copies of its market-leading Netscape Communicator and Navigator client software have been downloaded from Netcenter and licensed mirror sites.”
“Netscape Netcenter Membership Surges, With Expanded Site Surpassing Seven Million Member Milestone,”
Sept. 2, 1998,

Microsoft’s brief points out that the government is attempting to create a false standard for determining whether the case can be resolved through summary judgment. The company’s brief notes that the government
“bear[s] the burden of proof on each and every element of their purported claims. If they cannot prove any one essential element of a claim, then that claim must be dismissed … regardless of whether the other elements of the claim involve disputed issues of fact. Contrary to their suggestion, therefore, plaintiffs cannot survive summary judgment by establishing ‘a single material factual dispute, without more.'”
(Reply brief, page 2)

Rather than address the facts and the law that undermine every claim against the company and therefore support Microsoft’s motion for summary judgment, the government is attempting to change the subject and create the false impression that there are legitimate issues that cannot be decided through summary judgment, the company’s brief points out.

“By trying to rewrite and expand their case in the past month, the government has shown a lack of faith in the case they filed last May, after nearly two years of investigation,”
Neukom said.
“Given the appeals court decision and the factual record, we are asking the court, at a minimum, to dismiss the government’s claims against Microsoft’s decision to build Internet features into the Windows operating system. If the government wants to make new accusations, they should be required to file a new complaint, rather than inflating and complicating this case.”

In its reply brief, Microsoft refutes the government’s attempt to use new and unfounded allegations as a smokescreen to convince the court to deny summary judgment in favor of Microsoft.
“As part of their last-minute effort to refashion their case, plaintiffs also attempt to de-emphasize what was previously the focus of their claims,”
the company’s brief notes. (Reply brief, page 4)

While the government has made last-minute allegations that Microsoft’s discussions with Intel Corp., Apple Computer Inc., RealNetworks Inc. and other high tech companies were somehow improper, the company’s brief notes that
“similar discussions occur on a routine basis between companies in the software industry that develop complementary products. Consumers would be decidedly worse off if such coordination of development efforts did not occur, and Microsoft would surely be the subject of vociferous complaints under the antitrust laws if it refused to cooperate with the many companies that develop products that run on top of its operating system software.”
(Reply brief, page 44)

“The court should not be distracted from the task at hand by all of the flak plaintiffs have thrown up,”
the brief concludes.
“Such irrelevancies do not detract from the inescapable conclusion that plaintiffs cannot satisfy essential elements of their claims. As a result, summary judgment should be granted dismissing those claims in their entirety.”
(Reply brief, page 46)

Oral arguments on Microsoft’s motion for summary judgment are scheduled for Friday, Sept. 11, 1998, before Federal District Court Judge Thomas Penfield Jackson.

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In a detailed 48-page legal brief, Microsoft urged Federal District Court Judge Thomas Penfield Jackson to ignore the government’s last-minute attempts to obscure the facts and rewrite the lawsuit brought against the company earlier this year.

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