It had been a brisk, even perfunctory, courtroom session. On August 21, 1995, Microsoft's tall, silver-haired general counsel, known for his bow ties and aristocratic reserve, was almost visibly gloating. After a long investigation into Microsoft's business practices, he stood on the courthouse steps and declared, "At the end of five years, we were willing to accommodate the government on some licensing matters, and the rest of our practices apparently passed muster."
For Microsoft, this was a moment to enjoy, having swatted aside a government challenge to its way of doing business.
For the government, it was a hard lesson learned. It was not that Microsoft's business practices had passed muster. Far from it. It came down to not acting quickly enough in the fast-paced world of high technology.
But the battle was just beginning. On June 23, 1995, the Justice Department had received a letter from Netscape's outside counsel, Gary L. Reback, sent two days after a Netscape-Microsoft meeting. The letter, which recounted verbal exchanges and events that took place at the meeting, pointed toward violations of the Sherman Antitrust Act. At first, the Justice Department did not grasp the significance of the meeting. But it would prove to be the starting point in the narrative of the government's case.
According to Reback's letter, Microsoft had made Netscape an all-or-nothing offer: Microsoft would not give Netscape the technology plumbing in Windows unless the software giant received an equity interest in Netscape, a seat on Netscape's Board of Directors, and otherwise controlled Netscape's ability to compete against Microsoft.
The Netscape-Microsoft meeting and Reback's letter led to the most watched antitrust trial of the century, and the first real test of the century-old doctrine of antitrust in the information age. In a trial that captured the world's attention like no other legal battle in recent corporate history, the government alleged that when Netscape rebuffed Microsoft's proposal, the software giant used every bit of its market muscle to stifle the challenge, crush Netscape, and thus protect its monopoly. Microsoft, the government said, then pressured the entire industry-including Compaq, America Online, Apple, Intel, and IBM- to step back from supporting Netscape and from competing with Microsoft in any significant way.
The Government's relentless attack on Microsoft portrayed America's most successful company as a predatory monopolist that bullied both its partners and its rivals in the industry. Yet beyond tarnishing Microsoft's reputation, the case had legal implications for everything from electronic commerce to network communications and had successfully posed one enduring question: What are the appropriate legal restraints on the behavior of a powerful company in a dynamic, high-technology industry?
Now, New York Times reporters Joel Brinkley and Steve Lohr, who have watched the drama unfold in Washington and in Silicon Valley since before the trial began, give a detailed, richly-textured account of the landmark case-and put the important issues into perspective as only The New York Times can do.
As the powerhouse of personal computing, Microsoft has grown faster and touched more lives than just about any other company in recent memory. Guided by its brilliant, driven leader, Bill Gates, the software giant has been dogged by its share of competitors over the years. But no other business rivalry captured the public imagination quite like the one between Netscape and Microsoft.
When Judge Thomas Penfield Jackson sided with the government and ruled Microsoft guilty of violating antitrust laws with predatory behavior, shock waves were sent across the country causing record-breaking drops in the Nasdaq, wiping out billions in paper-wealth for Microsoft, and, overall, battering technology-shares across the board.
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