Microsoft's Trials THOU SHALT NOT LIE
By Joseph Nocera

(FORTUNE Magazine) – One of my most enduring memories of the Microsoft trial came on a Friday afternoon in late February. It was the last day before a three-month recess, and the mood in the courthouse was one of keen anticipation for the much needed break. On the stand was a 39-year-old Microsoft executive named Robert Muglia, whom we trial wags were calling "the luckiest guy at the Microsoft trial" because nobody really wanted to hear his testimony. We all just wanted to get out of town.

Like so many previous Microsoft witnesses, Muglia gave testimony bordering on the surreal: Again and again, government prosecutor David Boies showed damaging Microsoft e-mails to Muglia; again and again, the witness denied the e-mails said what they seemed to say; again and again, Judge Thomas Penfield Jackson rolled his eyes.

Late in the afternoon, as Muglia tried to "reinterpret" the most unambiguous e-mail yet--a blunt Bill Gates missive in which the Microsoft CEO wrote that he was "hardcore about NOT supporting" a particular piece of Sun's Java technology--Jackson finally had had enough. Looking straight at the witness, the judge told him there was only one way to read the e-mail. And when Muglia responded with a lengthy lecture on how to interpret a Bill Gates e-mail, Jackson lost it. "No!" he shouted, slamming his fist down. "Stop!" His face reddened with anger, and he stormed off to his chambers to compose himself.

Is there a connection between that incident and Judge Jackson's recent "findings of fact," in which he declared that Microsoft "enjoys monopoly power" and has abused that power? You bet there is. The judge's harsh findings are a direct result of Microsoft's stubborn insistence on claiming repeatedly in his courtroom that black was white and white was black. "They kept trying to walk away from their own record," says Kevin Arquit, a Rogers & Wells attorney who has represented several Microsoft competitors, "and Jackson didn't buy it." Adds a government official: "He's saying, 'You soiled my courtroom.' "

During the trial it always seemed that a less strident approach might have yielded better results for Microsoft. That seems even more true now. Had Microsoft been willing to concede the obvious--that it plays rough, for instance--it might well have sounded more credible on the issues that really mattered in the case, such as whether it was trying to put Netscape out of business by bundling Microsoft's Internet Explorer browser into Windows. By asking the judge to swallow such absurdities as Muglia's testimony, Microsoft instead gave Jackson an excuse to swallow nothing.

Indeed, for anyone who sat through the trial, the most striking aspect of the findings of fact is how closely they hew to the government's narrative. "On every key matter of interpretation, Jackson fully embraces the government's version," says William Kovacic, the antitrust expert at George Washington University who closely observed the trial. Even when Microsoft made reasonable-sounding arguments in the courtroom, the judge didn't buy them. For instance, Microsoft consistently claimed that even though computer manufacturers were prevented from preloading Netscape Navigator, Netscape fans could still download Navigator from the Internet--and millions did so. The judge dismissed the point out of hand.

In the entire document, I could find only one paragraph remotely favorable to Microsoft. It comes near the end, when the judge concedes that integrating Internet Explorer with Windows "contributed to improving the quality of Web-browsing software, lowering its costs, and increasing its consumers." But in the next paragraph, Jackson claims that that same integration "also caused...serious and far-reaching consumer harm...." In the moments after the findings were released, Microsoft legal consultant Charles F. Rule took to the airwaves and stressed that solitary, positive statement of Jackson's--in effect, asking us to ignore the other 206 paragraphs. Plainly, Microsoft still doesn't get it. (For more on Microsoft, see the following stories, plus Alsop on Infotech.)

But this game is far from over. Jackson still has to issue his legal conclusion, after which the case will move to the court of appeals, where Microsoft thinks it has the best chance of winning. And there will be pressure to settle, even on the government's side. Still, these findings of fact represent a colossal blow to Microsoft--a rebuke of its business practices and a threat to its future at least as dangerous as Navigator ever was. For this, Microsoft has only itself to blame. During the trial, John Warden, the company's chief trial lawyer, used to tell the press that the credibility of Microsoft's witnesses didn't matter. If Judge Jackson's ruling proves nothing else, it proves that, in his court, nothing mattered more.