Excerpt #4, U. S. Court of Appeals, February 27, 2001
"Let the Bitch Slapping Begin"
DOJ Tries to Explains How Microsoft Violated the Sherman Anti-Trust Act

 
What happens when your case has no logical flow or conclusions
(Image from www.bitchslapped.com)

The text in the (red font and parenthesis) is my sarcastic interpretation of what is going on in the minds of the Appeals Judges as the DOJ presents their case. For the third time in six years, let's take a look at how the Appeals Judges "bitch slap" the government's case against Microsoft.  Mr. Minear is the guy representing the DOJ in the Court of Appeals, since Klein and Boies ran off when they had to argue against the big boys.

The DOJ is telling the Court of Appeals how Microsoft violated the Sherman Anti-Trust Act.  And the Judges are letting him have it with both barrels.

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THE COURT: Good morning. You may proceed.

MR. MINEAR: Thank you, Your Honor, and may it please the Court. My name is Jeffrey Minear, and I will speak on behalf of the appellees for this portion of the argument. The United States and numerous individual states sued Microsoft because the company uses monopoly power to stifle the competitive process. The government specifically proved that Microsoft violated Section 2 of the Sherman Act through a campaign of anticompetitive acts to protect its operating system monopoly. Microsoft took extraordinary steps and spent extraordinary revenue to prevent consumers from selecting certain innovative technologies, such as Navigator and Java, that in time could weaken the applications barriers entry that protected the operating systems monopoly.

THE COURT: How much did they spend?

MR. MINEAR: The expenditures for IE itself were on the order of a hundred million dollars a year.

THE COURT: That was for developing, though. There's nothing wrong with that, was there? You are not challenging that aspect. (Damn, it is good to know that an American company spends a 100 million in R&D per year to make a browser better)

MR. MINEAR: No, we are not.

THE COURT: But you said they spent extraordinary sums. Apart from that hundred million dollars, what did they spend?

MR. MINEAR: They also spent $30 million a year on average in marketing for a product that they were giving away for free, and we think that that is significant. Now, Microsoft's own documents demonstrate that it took the steps, the anticompetitive steps that I will speak of later, to protect it Windows monopoly. The government did not dream up this theory. We found it in Microsoft's documents. And those documents laid out the business strategy for protecting the monopoly and maintaining it through anticompetitive acts.

THE COURT: Is there any case in which the relevant market is defined to exclude the substitute service that is the alleged victim of the predatory conduct? I can't find any. (What is the basis for your claim? I can't any other cases in the entire history of the US to support your case)

MR. MINEAR: Your Honor, I think that that does not characterize correctly the government's case. The government views middleware as a threat to the operating system monopoly because it makes other operating systems a better substitute for the Windows operating system. That is the way in which the middleware would erode the applications.

THE COURT: That's not the way your brief is written. I mean I am deadly serious. I went over this over and over again. I think you are going to hear a lot of questions on the ironies in the theory, but that is not the way your brief is written. You conclude having pointed to the predatory .. the alleged predatory conduct by saying and the destructive effects here were to the middleware market. There is never a reference to Linux, BeOs, to any of the other operating systems. There's a dramatic shift. You talk about operating systems starting off, but your premise is not that Microsoft has destroyed those possibilities, but rather that Microsoft has destroyed a nascent possibility. (So you are saying Microsoft killed off competition before the competition was even born?)

MR. MINEAR: Your Honor, with respect .. I believe that our brief makes the point --the point that I just made, namely, that middleware posed a threat because if it were widely introduced and widely adopted, it could be ported to a number of operating systems.

THE COURT: Right, and eventually make the operating systems relatively insignificant.

MR. MINEAR: Yes, and make them -- actually make them better competitors.

THE COURT: No, make them relatively insignificant because the principal, the substantive work that the operating system does would be taken over by the middleware. That's your whole theory. (Let me explain your case for you so you don't look so dumb)

MR. MINEAR: Only a part ..

THE COURT: And indeed, if you were relying on Microsoft's papers, that is certainly what the Dean argues. That was the threat that Microsoft contemplated, that is, that middleware would virtually wipe out anything of great import that operating systems now offer substantively. They would be there but not nearly as important.

MR. MINEAR: Your Honor.

THE COURT: I still want to come back to my question. (Answer my fucking question, moron)

MR. MINEAR: Yes, Your Honor.

THE COURT: Assume I'm right. Okay? I understand you are going to argue your case. I'd still like to know is there any case that you can point me to in which the relative market is defined to exclude the substitute service that's the alleged victim of the predatory conduct. (Give me an example of a case similar to this. Repeat…give me an example of a case similar to this)

MR. MINEAR: Your Honor, I think that I cannot point to a particular case, but I think it certainly is reasonable to see why that could be that this situation can arise, particularly when the threat itself is quite nascent and does not yet pose a threat to .. in the relevant market to the product at issue. Again, I'd like to emphasize, though, that our theory is different, and we believe our theory is reflected in the District Court's findings and the District Court's conclusions. I think the District Court was quite clear as to this point. The threat that Microsoft's -- that Navigator posed was to make other operating systems competitive with Windows. That would in effect, in Mr. Gate's words, commoditize the operating systems and lead to a diminution or a erosion of the applications barrier to entry that had sustained the Microsoft operating system monopoly.

THE COURT: You addressed Mr. Urowsky's really last point, which was that, yes indeed Microsoft was trying to as he says it stimulate software producers to use its platform. Now I take it that any competitor in the platform market would have to do that; right?

MR. MINEAR: Yes, Your Honor.

THE COURT: Okay. So that must be done. That is part of the competition for the platform market.

MR. MINEAR: Your Honor, our brief makes clear that we have no objection to Microsoft's broad distribution of its product, its development of IE. Those are part of the competitive process which we favored.

THE COURT: You do say that the OEMs have to have, under antitrust law, the right not to include IE, although it's unclear how much of IE they have a right not to include.

MR. MINEAR: Well, Your Honor, our view with regard to the OEMs is again as stated in the District Court's factual findings. The OEMs found that it was not profitable and contrary to consumer interest to provide -- to deny consumers a choice of browsers. Consumers wanted a choice of browsers, and they wanted to provide ..

THE COURT: I'm sorry. Why wouldn't having both browsers on the machine be a choice of browsers? (Isn't there a choice of MSN or AOL or Compuserve Or Prodigy on my Win 95/98 machine as my ISP?)

MR. MINEAR: The problem was, as the OEMs knew, this was confusing to the individual consumer. It increased their support cost. If you increase the support costs, and you could lose the profit on any given machine. And they also had ..

THE COURT: You are arguing that this was the creation of an artificial and I take it serious barrier. On that point doesn't the uncontradicted testimony that ten OEMs included both, and Mr. Barksdale's testimony that Netscape was completely interoperable with Windows, where Windows had IE, doesn't that undermine that position? (So ten OEMs shipped both. Consumer can choose which to use. What's the problem?)

MR. MINEAR: The District Court credited the testimony of others that indicated there was consumer confusion. This came from both the OEMs themselves ..

THE COURT: Is there measurement of the scale of consumer confusion?

MR. MINEAR: No, but I believe ..

THE COURT: I mean there are an awful lot of people who have both right on their computer; right? (Look dickhead, we on the Appeals Court have both IE and Netscape on our computers. What's the problem?)

MR. MINEAR: Yes. But nevertheless, the OEMs, who were very close to the customers, they're the ones who received the support calls, viewed this as a real problem. They complained to Microsoft about this. And there was no good reason not to provide that ..

THE COURT: Well, in a sense you and Mr. Urowsky agree that there was a reason, namely, to stimulate software programmers to program in whichever it is, either Java or Windows.

MR. MINEAR: I'd like to pause to look at that question of motivating developers to provide applications. Those developers would be providing those applications whether Navigator was on the system or whether IE is on the system. And instead, in our view, there ought to be competition on the merits between those two browsers. And that is what Microsoft's actions were foreclosing.

THE COURT: To have a cross.platform middleware, you envisioned having a competitive situation?

MR. MINEAR: No.

THE COURT: Of course not. We are going to replace one monopoly with another if you're right; right? That's what Judge Ginsburg was suggesting.

MR. MINEAR: Your Honor, the question is we don't know if this is a win or ..

THE COURT: Take your theory all the way through. That's what this case ultimately is about is whether or not the Microsoft -- the alleged Microsoft monopoly should be replaced by what you say over and over in your brief should be the Netscape.Sun combination together middleware monopoly. It would have to be a monopoly because you can't compete to offer that which you envision them offering; right?

MR. MINEAR: Judge Edwards, I disagree with your characterization of what this case is all about. It's all about allowing the competitive process to determine who will be the winner in the market.

THE COURT: But the winner -- we are not disagreeing so far. The winner will be a monopoly; right? (either Windows/IE wins, or Sun/Java/Netscape wins, right?)

MR. MINEAR: We do not know that. I think we have would have to allow the market to determine that.

THE COURT: You don't seriously assume that you have a competing middleware operation, do you? (Let's see, that loser journalist Nicholas Petreley supported OS/2 vs. Windows, and he helped start up that OS/2 magazine.  But OS/2 died, along with his magazine.  Then Petreley switched to support the NC vs Windows, the Network Computer vision that SUN/Oracle/Netscape had.  So he started up NC Magazine, or whatever it was called.   But the NC died and so did his NC magazine.  THEN Petreley switched to supporting Linux vs. Windows, and helped start up that Linux magazine....hummm......I am beginning to see a pattern here...)

MR. MINEAR: I can't say that it's inconceivable that a situation could arise where there would be ..

THE COURT: You haven't argued that. Let's put it that way. You haven't argued that. The end result is not going to be a competing .. a number of folks will say here we are, consumers. We are all competing as the middleware operation. Choose one.

MR. MINEAR: We haven't argued an end result one way or the other.

THE COURT: When you prepare a case like this, believe me, you think about every piece including the end result. There is some irony. Maybe it's not irony. Maybe in this business because of its dynamic nature, what we are going to see from here on in is competition, who is going to be the next monopoly and what the form will be. Maybe that's what we are doing. Let me ask you about some questions in causation, if I will, because that's what's really bothering me - (besides the fact that you guys aren't all that smart)

MR. MINEAR: Yes, sir.

THE COURT: -- about your theory. Professor Areeda and a number of others say that impermissible, exclusionary behavior is conduct other than competition on the merits that reasonably appears capable of making a significant contribution to maintaining the monopoly; right?

MR. MINEAR: That's correct.

THE COURT: So there's got to be a causal connection between the conduct and the maintenance of the monopoly; right?

MR. MINEAR: Yes.

THE COURT: So a monopolist cannot be seen to advance monopoly power by destroying something that doesn't reasonably threaten the monopoly; right? (If there is a monopoly, but there is no real competition for the monopoly, then how can the monopoly be accused of destroying the competition if there was no competition to begin with?)

MR. MINEAR: I disagree there. The monopolist can in fact be seen as destroying competition if he correctly perceives that this is a threat.

THE COURT: I said doesn't it reasonably threaten the monopoly.

MR. MINEAR: But if it will.

THE COURT: Doesn't it reasonably. It's not reasonable for anyone to assume that this threatens the monopoly. That's all I'm asking. No trick yet. (Laughter.)

MR. MINEAR: All right.

THE COURT: Is that an objective test that Judge Edwards just stated? It's an objective test, isn't it?

MR. MINEAR: Yes, based on -- it's a reasonable threat, yes.

THE COURT: Now, if an institution is not a threat because it has neither the interest nor the capacity to challenge the monopoly, what do we say about that? Is that a reasonable threat?  (If my seven year old son decides to write a  simple, clunky, browser in the garage for fun, is he a threat to Microsoft?) 

MR. MINEAR: I'm afraid I don't understand. Can you repeat that, Your Honor?

THE COURT: Let's say, for example, Microsoft whimsically has a thing about a grocery chain. They don't like them. They have got a lot a power, a lot of friends in society, and they use their connections to destroy the advertising possibilities for this grocery chain which goes under. Okay? They use lots of things. That's not going to be a Sherman Act Section 2 problem, is it?  

MR. MINEAR: No, it isn't because they do not have monopoly power in the grocery market.

THE COURT: Exactly. (you finally understood something I said.) Okay, so if we are looking at .. that's my point. If we are looking at an institution that is not reasonably going to compete with Microsoft in this middleware area, we won't worry about it; right? For example, the grocery store.

MR. MINEAR: The grocery store, yes.

THE COURT: Now, here is some of what's in the record that's worrying me with those concessions in mind. Mr. Barksdale says .. he was unequivocal in saying that Netscape never maintained in any serious way that Navigator was a substitute even for the platform characteristics of Windows. Let me just give you my scenario. The Dean was unequivocal in testifying that Netscape never sought to achieve middleware status to be a viable competitor to the Windows operating system. The District Court found there wasn't enough evidence to say that this could ever happen, certainly not Netscape alone, but they were focused on Netscape and Java because that's the way you're presenting the case. Netscape itself did not act to become a viable platform. For example, it never developed the componentized version of the browser. Netscape .. the testimony is clear that Netscape currently enjoys sufficient usage to share .. usage share to offer the ISV as a viable platform, and yet they haven't done it. And there are problems in the connection between Netscape and Sun. They have not put all of what Sun needs in order to be able to distribute that which Sun would need to be a viable platform. Now, your whole theory of the case is not that Netscape alone is going to be the middleware platform, but that Netscape and Sun together. There is no doubt in my mind that Sun has the capacity, based on everything I see, to be in the middleware business. But you argue the case very clearly that it must be Netscape, the carrier, and Sun together. And I went back and checked it again. Now, if I am right in looking at this record, that Netscape neither has the interest nor has done anything to facilitate the possibility, what's different from Netscape and the grocery store? (Netscape didn't want to be a middleware platform for building software. Yet you say Microsoft killed off Netscape, who was a competitor for the middle platform against the Windows platform. How can you kill off something that was never there to begin with?  Never mind the fact that those Netscape developers would be too dumb to make the leap from an HTML viewer to a full blown cross-platform nirvana.)

MR. MINEAR: Your Honor, I think that the facts that you've chosen from the record, or the evidence you've chosen from the record, don't correctly capture the factual findings of the District Court or the government's theory of the case.

THE COURT: Well, the District Court on the possibility was clear. The District Court said he couldn't make any findings. The District Court said he could not conclude that Netscape and Sun together would achieve the status that you are envisioning.  (Jackson's pretty dumb, but even he realized that Netscape and Sun developers together are too dumb to build this cross-platform Nirvana platform.)

MR. MINEAR: It said that it could not ultimately achieve that status, but I think the District Court was also quite clear that Microsoft's steps prevented competition in the market that could have led to that ..

THE COURT: But if it's a grocery store, what difference does it make? If we have a paranoid monopolist who shoots at anything, whether it's viable or not. (I still don't see what law was broken yet….Microsoft should be allowed to compete wherever they want.  This is good for the economy, and good for the consumer.  As a matter of fact, forget the grocery store analogy, the Appeals Court should let Microsoft buy up all the cable TV companies in the US, and let Microsoft compete against the satellite TV companies for content and high speed Internet access.  My damn cable bill is $99 a month.  I am sure Microsoft would come in with guns blazing, reducing cost to drive the satellite dish companies out of business.  Then maybe I can get 500 channels of cable TV and a 4 megabit connection to the Internet for a reasonable $40 a month.  Then those Microsoft folks could write some code and let my telephone use the same cable modem connection so I can make free phone calls, because my damn phone bill is also $99 a month.  Yeah...yeah.....I like that scenario)

MR. MINEAR: The crucial difference, Your Honor, is that the grocery store threat poses no threat to Microsoft's monopoly.

THE COURT: What I'm suggesting to you, and you have to tell me where the record is different, because I've looked at this over and over and over again. Your argument is you must have Netscape and Sun together. I can't find anything of import in the record to suggest that Netscape has an interest in or capacity to serve in the middleware platform market. (These Netscape guys aren't smart. They should have componentized, instead of trying to re-write their browser in Java)

MR. MINEAR: Your Honor, I think that the evidence .. I cannot cite you the particular evidence except to say that I believe there is a mixture of evidence with regard to Netscape's plans and expectations and certainly Microsoft ..

THE COURT: You've got to do better than that. I mean we've heard a lot up to now about the facts and findings and how we are supposed to defer to them. I'm speaking very directly now. I'm telling you I can't find any, that I've pored through the record. I've found one statement early on where someone at Netscape said you know we are going to take over the world. But then Barksdale was very clear in his testimony that Netscape was not intending to, not designed to enter this middleware market. That's not what it was about. Now, where is the counter.evidence? Where are the findings that you can rest on to show me we have something other than a grocery store? (Your case sucks. You Suck. Joe Klein Sucks. Judge Jackson Suck.)

MR. MINEAR: Your Honor, I have to disagree with your characterization of Mr. Barksdale's testimony.

THE COURT: I read it. I just read his words. (I can fucking read, can you?)

MR. MINEAR: Yes, but I believe his words indicate that they were not going to compete with Windows as an operating system.

THE COURT: No, I read the words. Platform. He didn't say operating system. (Like I said, I can fucking read, can you?)

MR. MINEAR: Your Honor, I think that his content, his discussion in context together with Microsoft's perceptions of what were going to be done and the discussions that came out of the June 21st ..

THE COURT: Perceptions can't carry me anywhere on causation, because all that causes me to imagine is the paranoid monopolist. That's someone who gets up, who has ideas way ahead of the rest of the world, and gets up in the middle of the night and shoots at any movement. All right, fine. That doesn't tell me anything that Microsoft saw Netscape as a real threat. (Yeah, it is obvious that Bill is Paranoid…but being paranoid is okay. It is especially okay for America that Bill shoots at everything that moves. Can you imagine if we had those bastards in Iraq dictating standards in the PC market? Or China? Or Russia? Thank God Bill tries to kill everything that moves in his path. Two French guys with a computer and a couple of programming classes could probably wipe out the entire Netscape development team, and then we would have to listen to those bastards from France on how a computer should work.) What I'm trying to figure out is did Netscape perceive the possibility, have the capacity to perform, and then do what it could and should have done? And some of these things are fairly easy, like the componentized version of the browser, which they didn't do.

MR. MINEAR: They were working on that, however. The record indicates that they were planning to develop such a componentized version for some of the software developers who wanted it. But going --

THE COURT: Nothing that -- First of all, when you talk about perceptions, you agree with me that the Areeda test, which you are adopting, is an objective test, so it's not going to turn on what Microsoft's perceptions were. And second of all, isn't this, I asked the same question of Mr. Urowsky. Isn't this a question not of economics or not of market penetration or any of that, but a question of technological development? And Judge Edwards is asking you, as I understand it, where is the evidence that Netscape either had the potential or was on the road to technological development to set up or expose API sufficient to have applications written so that it would become a platform in competition with Microsoft? And if you don't have that evidence, then how can you possibly say that there's causation here? (How can Person A kill Person B if Person B never existed?)

MR. MINEAR: Your Honor, I point to two pieces of evidence that I think are important. First of all is the combination of Navigator with Java. And second is the fact that when Microsoft approached Netscape to cede the market, what they were seeking was a cession of platform capabilities. And Netscape refused to go along with that.

THE COURT: That doesn't mean that Netscape either had the capacity or interest to do it. I won't give my own take on what I saw in the record. But yes, there's no doubt that Microsoft had a large vision at that point. But there's nothing to indicate that Netscape had the same vision or if they did, that they intended to act on it. And so that they concluded that meeting by saying, go away. Microsoft didn't tell me anything.  (Microsoft understands the big picture.  Netscape could barely create an HTML viewer.)

MR. MINEAR: Your Honor, I think we disagree on this point. And I think we do agree, though, however, that Netscape and Java together did pose a threat.

THE COURT: If Netscape has the capacity and interest to do what it takes to enter the middleware platform area. Now, if Barksdale says no, that's not what we are going to do, the Microsoft testimony through the Dean says they're not doing anything to ready themselves for the platform, and the evidence shows that there are serious technical problems in the connection between Netscape and Java, the combination that you are relying on, I don't know what that shows us on causation. (Repeat: How can Person A kill Person B if Person B never existed?)

MR. MINEAR: Your Honor, that connection they're talking about between Navigator and Java, the problems there, I think there is testimony in the record from Dr. Gosling that Navigator and Java were working together to try and develop cross.platform capabilities. Now, Netscape fell behind in certain respects, but that was primarily because it had its air supply cut off, to use the terms that were used ..

THE COURT: Where is the record evidence on that? Where are the facts? Where are the facts on that they could not, for example, componentize? They could not write the right script for Java because of things that Netscape -- that Microsoft were doing? Where are the findings? (This is a court of law. Give me facts. Don't give me hearsay)

MR. MINEAR: A specific example of that is the finding of the District Court that Netscape had discontinued the development of a JNI even though it was useful for the job implementation.

THE COURT: That was another point I was going to raise with you. Go ahead. (I am two steps ahead of you at all times. That is why I am up here, and you are down there.)

MR. MINEAR: Because they did not have the funding that was necessary to continue the work because of the competitive pressure that they were under. Remember, the Netscape business model was originally to sell their browser, and they had to change their model when Microsoft offered its browser for free. And that cut back on the revenues that they had for certain types of development.

THE COURT: What is Sun's model? Because Java is always depicted as this cross.platform technology which will commoditize the operating system. How is Sun going to make money if they put it out there for free? Then obviously, we are in a wonderful world where this we'll call it generally the platform monopoly is disposed of. But if it's going to simply be the successor of Microsoft, I'm not sure what exactly the function of the suit is.  (What is the basis of your supposed case?  I am not sure you have one)

MR. MINEAR: I believe that Java licenses its Java programming language and its JVM so it does receive revenues from that. Developers are free to use it.

THE COURT: And the more developers use it, the more money it makes; right?

MR. MINEAR: Yes. The more developers that use it, the more widely it's distributed, the more money that Java makes.

THE COURT: So it does become the new monster; right?

MR. MINEAR: It could potentially. All of these were potential threats.

THE COURT: Why not? I mean isn't that really the government's theory .. I mean the government persuaded the District Court to make this finding of fact that essentially Netscape needed to become the standard. That's because it needed universality. It needed not to have competition, in effect. (We find it weird that Judge Jackson wants Netscape to become the new standard.  I think all you guys were deluded that cross-platform was going to work. Here, six years later, it still doesn't work)

MR. MINEAR: Your Honor, I think that what we indicated at trial, that by becoming the standard did not mean that it had to become a monopolist. It simply had to have sufficiently widespread use that applications writers would view it as an alternative to writing ..

THE COURT: That's not what the District Court found. If you look at Finding 378, the District Court found specifically that Netscape or Navigator had become the standard. It's just exactly what Judge Williams said. How do you explain Finding 378? (Did Sun and Netscape make your house payments? Did they pay for your son's college education?  What the fuck were you guys thinking?)

MR. MINEAR: By becoming the standard, it did not need to become the only browser. Microsoft realized that simply by preventing it from having a sufficiently broad usage level, it could .. it would not attract applications development. And usage is key here. I think that's something that's important to understand in terms of the anticompetitive acts that Microsoft took to protect its monopoly. That as Microsoft itself recognized, that it's usage that determines what's important here, not merely distribution; and the fact that numerous copies of Netscape could have been distributed does not answer the question of whether there was sufficient usage that applications writers would be writing to Netscape and Java as platforms.

THE COURT: Suppose that happened, and they were writing to that platform. Doesn't it follow from your case about consumer confusion that either Netscape or IE is going to end up as the sole occupant of the desktop?

MR. MINEAR: Again, that may happen, but I don't think we can predict the market.

THE COURT: Well, tell us how you think it might not. Assuming there isn't .. we're all wondering about this curiosity in this case. It really looks like one monopoly replacing another. We all ask you the same question in different ways. We can't imagine how you are imagining otherwise. Indeed, your brief seems to accept that possibility. Is that what we are really talking about, one monopolist replacing another? Are we fighting for monopoly --fighting for the newest, latest monopoly status? (Are you trying to say that we should just kill Microsoft off because they are successful, and give the throne to Netscape and Sun?)

MR. MINEAR: Your Honor, my answer again is we don't know. And I'd like to give you two responses to this.

THE COURT: You have to have a theory as to -- First, you have a theory as to Microsoft's motivation. And you have sort of implicitly a theory as to what this nascent or embryonic competition was. But unless you .. the whole fight for getting programmers to program in the language, turns, it seems to me, on the notion that you want universality.

MR. MINEAR: Your Honor, our theory of the case is this: that the middleware was viewed by Microsoft as a threat. Perhaps they realized it even before Netscape did. But in any event, they realized it was a threat to their monopoly on operating systems. That operating system monopoly is protected by the applications barrier to entry. And they recognized the way middleware would threaten that monopoly is by eroding that barrier to entry, that it would become popular enough that people would write to that ..

THE COURT: Right. If you write to Java Netscape, your Java Netscape, there would be an applications barrier in the new middleware market. There would have to be. You can't compete reasonably if you want a cross.platform uniformity. That's what we are asking. You can't keep avoiding the question. If that's the answer, say yes. If you are hopelessly confused about it, say that too. But I mean, this really leaps out, Counsel. (You guys appear to be drunken sailors running around in a whorehouse. You don't know what you are doing, but you know you have to do something) Are we talking about monopoly to monopoly? Because you surely don't mean to envision Microsoft competing fairly with Netscape Java and having competing middleware applications that consumers are going to try and sort out.

MR. MINEAR: Well, Your Honor, if we assume that this is competition for monopoly, the fact still remains that that's a form of competition that is subject to Section 2.

THE COURT: I didn't say it was a bad thing, but you seem to be running from it as if it is. It's curious because we don't normally see it. And it may be the nature of this kind of a market, but it seems to be that that's what you're talking about.

MR. MINEAR: I apologize, Your Honor. I was simply trying to clarify that I simply can't predict what the market will look like. I think we have to leave that to the market ..

THE COURT: There was a time, I suppose, when before, when Java first arrived as a concept, in which it was tenable to hope that Java would be able to run on any underlying platform. Is that correct? Underlying OS, pardon me. Right?

MR. MINEAR: Yes.

THE COURT: So that you could have coexistent, stable equilibrium with Java and Windows coexisting.

MR. MINEAR: Yes, and I think ..

THE COURT: But the events seem to have overshadowed that. Java hasn't realized the potential that was initially perceived, and it starts to look more like a potential alternative to Windows rather than a co.occupant of the desktop. (Java Sucks. Repeat after me, Java Sucks.)

MR. MINEAR: And the reason why that potential hasn't been recognized ..

THE COURT: I understand part of your theory is that Microsoft assured that it wouldn't come to fruition.

MR. MINEAR: Yes.

THE COURT: Now, but, if -- let's go back to the Edenic days in which people thought these two might coexist in the sense that applications would run on either one. What about your theory of consumer confusion on the desktop? Wouldn't there still be only one on any given desktop?

MR. MINEAR: Would there be confusion if Java was running on all desktops together with ..

THE COURT: No, no. Well, maybe that's where you are going. I'm sorry. If Java and Windows were installed on the same PC desktop, according to the record we have here, one would expect consumer confusion, calls to the OEMs, no profit in it for the OEMs to carry both of them, and only one would ultimately be installed. (You said earlier there is confusion if there are two browsers, but now you want two development PLATFORMS on the same operating systems, so by your earlier logic, doesn't this mean more confusion?)

MR. MINEAR: No, I don't think that's the case again, Your Honor, because Java .. we have to remember the role that the browsers played in invoking Java, that the browsers would be installed on the operating system. And the browser would most likely go to a web.based application. It would find a Java applet there most likely, the full.fledged Java application ..

THE COURT: But take Judge Ginsburg's question.

MR. MINEAR: Yes.

THE COURT: It's the same question. You wouldn't use IE and Netscape Java. You'd have to pick one or the other.

MR. MINEAR: Yes, I think that's probably true.

THE COURT: And so would an OEM.

MR. MINEAR: An OEM would as well.

THE COURT: So if that's probably true, then your answer to your own prior question which you didn't want to answer, but you said now .. I think the implication of what you just said now is there would probably emerge a single, ubiquitous winner in this competition.

MR. MINEAR: I would by no means wish to exclude that possibility.

THE COURT: That's a possibility, but it's not fatal to your argument by any means, right.

MR. MINEAR: Yes.

THE COURT: There needs to be what Sedgwick calls competition for the field as opposed to competition within the field.

THE COURT: This whole argument, though, does it only deal with OEMs because you still have the IAP(Internet Access Provider) market out there?

MR. MINEAR: Yes, that's correct.

THE COURT: This argument only deals with OEMs; right?

MR. MINEAR: Yes, in a sense, although the IAPs also are forced to select a primary browser of one kind or another. And so I suppose you could say that that could arise. Now, the IAPs, I suppose do have the possibility and actually the preference to offer their users alternative browsers.

THE COURT: Right.

MR. MINEAR: And so you do have .. you can have the situation where in fact the consumers are evenly divided between IE and Netscape, and applications writers would act in response to what happens. But what's important is how we get there.

THE COURT: That is exactly the question. What methods of competition are permissible? It appears to be the government's position that the mere inclusion by Microsoft with its operating system of its browser is ipso facto exclusionary. It is a forbidden form of competition. Now, Mr. Urowsky said .. gave an answer as to why it was doing all this, and his answer covered the other methods of seeking distribution which are quite different from Dean Schmalensee. He said it was in order to encourage applications writers to write to Microsoft, to Windows. I take it the new competitive --the new potential monopolist is also entitled to do things in order to encourage applications writers to write to it.

MR. MINEAR: Yes.

THE COURT: Which of -- how do we draw the line between the permissible and the impermissible?

MR. MINEAR: Well, first of all, Section 2 applies to the monopolist and the actions the monopolist might be taking. So we have to be clear on that.

THE COURT: We still have to have a line. (Please answer my damn question)

MR. MINEAR: Yes. But with regard to what Microsoft was doing with respect to Windows, we have no objection to Microsoft offering IE as part of the Windows package. Where Microsoft crossed the line ..

THE COURT: Well, but if one can compete for applications writers, why isn't Microsoft entitled to try to seek usage, right?

MR. MINEAR: Yes. The problem here is the way in which they tried to obtain the usage.

THE COURT: And what exactly is it that makes it impermissible?

MR. MINEAR: Okay. In the OEM channel, fist of all ..

THE COURT: Put aside explicit exclusion.

MR. MINEAR: Yes. Your Honor, first of all, in the OEM channel .. I won't dwell on tying since that will be the discussion of this afternoon, but that was one of the methods that they used. But even if you view Windows and IE as a single product, that still was anticompetitive for Microsoft to refuse to allow the OEM to remove IE as it easily could have been done under Windows 95.

THE COURT: If it's a legitimate business purpose to encourage software writers to write to your system, what is Microsoft supposed to do in this context?

MR. MINEAR: Microsoft is supposed to allow competition on the merits.

THE COURT: Yes.

MR. MINEAR: And that means that the OEMs and the consumers are entitled to have a choice between Navigator and IE.

THE COURT: You're much stronger position on the consumers than on the OEMs; right? The OEMs do not necessarily have the consumers and Microsoft's interests at heart, or even the pure consumers' interests at heart; right? They have their own issues.

MR. MINEAR: But the District Court I think quite properly found that they're an accurate proxy for consumers. If we look ..

THE COURT: Do they have any interest in preventing fragmentation, which consumers do have an interest in?

MR. MINEAR: No. Well, perhaps they do. They have an interest in satisfying consumers ultimately. And the most direct way ..

THE COURT: Why isn't it having consumers able to either delete or more simply ignore a browser quite sufficient?

MR. MINEAR: Well, the OEMs were responding ..

THE COURT: It -- it seems I should go back to this. If Microsoft is entitled to compete to get writers to write to its system.

MR. MINEAR: What Microsoft cannot do is foreclose a competitor from reaching the market through means that are not pro competitive.

THE COURT: That's what I'm trying to find out. It is pro competitive for Sun to use methods to get its technology out there and thereby induce applications writers to write to it. What methods are permissible for Microsoft to do the same, if any? (If you put Netscape on a machine so people can write to the non-existent Netscape platform, can't Microsoft put IE on all machine so people can write to the existing Windows/IE platform?)

MR. MINEAR: Microsoft was free to offer its browser with IE and allow the OEMs to make a determination. What they were not free to do was to force the OEM and therefore the consumer to use IE.

THE COURT: I don't understand how it forces the consumer at all. As I understand it, the government's position is that the inclusion of the four libraries in OE is perfectly okay. The only thing that's fatal in terms of what Microsoft is doing is insisting that iexplorer.exe be included. What is it .. what is the pro competitive interest that makes it a matter of antitrust law for Microsoft not to be allowed to get that to a consumer, who can then totally ignore it? (Why must Microsoft delete IE. Just tell me why?)

MR. MINEAR: The problem is the consumer might not realize that he or she has a choice. And this will occur in a situation, as the OEMs described it, of consumer confusion. They are trying to respond to the consumer demand for Navigator, and they found in response that they were receiving that they had to load IE. If they put IE and Navigator both on the system, that the consumer would be confused, and so that led to a declining use ..

THE COURT: Is that consumer confusion quantified in any way?

MR. MINEAR: It's described. It's not quantified, but it is certainly described in the testimony.

THE COURT: Isn't there -- I mean if you are imposing on one firm a set of competitive restrictions that you aren't imposing on other firms .. let us say you acknowledge the legitimacy of a particular form of competition in general. Haven't you got to have a pretty good method for weighing at what point it becomes impermissible?

MR. MINEAR: Yes, Your Honor. But I think that the case law and common sense and the facts of this case provide direction on these matters.

THE COURT: Do you have any case that says that a manufacturer cannot define his product and let it get through to the consumers? I'm putting aside tying cases. Which we will come that this afternoon.

MR. MINEAR: I will point out the tying cases. But here let's look to the individual facts. And why is it that the OEM could not invoke the add/remove function that was available to the consumer in order to provide the consumer ..

THE COURT: You and Mr. Urowsky are on the same page on that; right? To get -- to have it out there, to have it used to encourage applications writers. You are on the same page, but all you disagree is as to what's permissible for whom, which is all that's at stake here. (let me summarize your case, since you are hopelessly lost…)

MR. MINEAR: But the difference in our view is that we view Microsoft as a monopolist and it's protecting its operating system monopoly as well.

THE COURT: But is it your position with respect to anything that has to do with encouraging applications writers to write to its system, it is -- it can do nothing. Let's say it can incur no cost which is explicitly aimed at that goal, exclusively at that goal.

MR. MINEAR: With all respect, Your Honor, we have to look at why are they incurring these costs, that IE generated no revenue. And according to IE --

THE COURT: Yes, but I mean we are round and round.  (We are going in circles here, and you are losing)

THE COURT: That's why they're emphasizing the applications. The encouragement to write applications.

MR. MINEAR: But the applications, if Navigator were on Windows rather than IE, those applications would be written to Navigator, and it also would encourage sales of Windows ultimately. So whether you have IE or Navigator makes no effect -- has no effect on the revenue.generating product here.

THE COURT: Yes, but it does in the long run because it has to do with what applications writers write to; right? That's the theory of your case.

MR. MINEAR: And the theory of our case is that Microsoft was concerned that if they wrote to Navigator, that would erode the applications barrier to entry and reduce monopoly power.

THE COURT: And by the same token, Sun was concerned that unless everybody was writing to Java, it would not be established as a cross.platform technology; right?

MR. MINEAR: I don't think .. well, first of all, Java I don't think had any monopoly power in these situations.

THE COURT: No, not at the time of trial or now. (Java sucks, repeat, Java sucks)

MR. MINEAR: Yes. And so I think we do have to distinguish the Java situation and the motivations for those that are competing ..

THE COURT: I understand there is a difference between a monopolist preserving his turf and the challenger trying to get its turf. You still are very vague on what methods of competition are permissible.

MR. MINEAR: Well, why don't we move on to some of the other methods so that ..

THE COURT: Well I don't want to move on (Don't avoid my questions) because I want to ask you a different .. I have a concern about just this issue, what is slightly different from Judge Williams, which is that as I read the District Court findings and conclusions, I didn't see the District Judge wrestling with this issue. The District Judge's findings all seem to focus just on the anticompetitive effects of including IE in Windows. There was no sort of counterbalance, no consideration .. at least I couldn't find it .. by the District Court of the business justifications for doing it and weighing the two against each other.  (It is almost like you want Microsoft to lay down and die, and do nothing to improve the operating system or the browser, so everyone else can catch up.

MR. MINEAR: The reason, Your Honor, is because the court had great difficulty in finding the business justifications when IE was not a revenue generating product. And ..

THE COURT: Well, was this argument that we've heard today not made before the District Court? That is, that what Microsoft was doing was trying to encourage software writers to write for it and that's why it was included in the browser? The argument was made in the District Court. There is a lot of evidence on this.

MR. MINEAR: Yes, but I think the response that was made to that was that is not going to increase the sale of Windows.

THE COURT: Why is that defined as the sole, legitimate function of Microsoft?

THE COURT: The District Court didn't say that anyway, did it? That's you today.

MR. MINEAR: I think the District Court did make the point that these .. that Microsoft's actions in promoting IE did not generate revenue because IE was not revenue generating. And it also did not encourage the sale of Windows because either IE or Navigator running on Windows would encourage the sale of Windows.

THE COURT: How about encouraging the survival or protecting the survival of Windows? Is that not legitimate? (After all, remember, my mom owns stock in Microsoft.  We don't want Microsoft to go bankrupt, that doesn't fucking help anyone)

MR. MINEAR: I don't think there's ever been any question about Windows surviving.

THE COURT: I'm deadly serious. If you are right about the expectations of this .. if the middleware notion is a viable notion .. and Windows -- I mean Microsoft has been totally out front. I mean that's so funny reading this initially. It depends on how you are looking at this, what you think. Microsoft is totally out front in saying oh, yeah, we perceive that concern. If that thing develops, if that seed is allowed to grow, we are in trouble. Now, our market share as Windows may stay as is until then suddenly we drop dead when Sun becomes the new monopoly, but we are not going to let that happen. That's what Judge Williams is asking. What are they supposed to do? (It is okay to defend your company. It is okay to kill off competition. It's the American way) You said it might be monopoly to monopoly is what we are looking at in these dynamic markets. Well, Windows and Microsoft are allowed to compete for the next stage; right?

MR. MINEAR: Yes, they are.

THE COURT: Okay, what Judge Williams keeps asking you is what are they allowed to do. If the next stage is a monopoly, not just let's bring everybody in and all compete fairly. It's a monopoly.

MR. MINEAR: They're allowed to compete on the merits of their product, and that is key, that the Sherman Act does not simply turn a blind eye to markets that are destined to become monopolies.

THE COURT: Is it your position .. you have mentioned a number of times that this was not a revenue.generating product for Microsoft. Is it your position that Microsoft created a barrier to entry in the browser market? The barrier being pretty insurmountable. That is, you can't earn a dime if you develop a browser.

MR. MINEAR: Well, we haven't made that argument. I mean certainly seems that there's some force to what you're suggesting, Your Honor.

THE COURT: That would keep all potential browser manufacturers out indefinitely, wouldn't it? I mean you would have to be a fool to get into that market. (Why didn't Netscape get out of the browser business altogether? They had a dumb ass business plan to begin with)

MR. MINEAR: Well, yes. In fact, an argument can be made that offering the browser for free was a form of predatory pricing. Now, we are not arguing that here.

THE COURT: For good reason. (Because we would crucify you at the stake if you did)

MR. MINEAR: We are going so far as to say that is permissible. What we are concerned about are very specific anticompetitive acts that were detailed by the District Court.

THE COURT: But will you articulate for me the line between the permissible and the impermissible? And you might do this in relation to the Lorraine Journal case, which is cited in neither the government nor Microsoft's brief. But that is a case of leveraging monopoly in one market into another or at any rate nipping competition in the bud, but there you had a clearly exclusive dealing requirement. And here you have a few into periphery. But no one is really exercised about them.

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