The following editorial appeared in today's Washington Post:
The impressive decision Thursday by a unanimous D.C. Circuit Court of Appeals is being portrayed by many as a big win for Microsoft. That's true in one sense; the threat of a breakup has been averted - at least for now. But the ideologically diverse court agreed with the Justice Department that Microsoft has used illegal anticompetitive means to preserve its monopoly in the personal computer operating system market. In avoiding earlier settlement, Microsoft bet that it could convince the D.C. Circuit's more conservative judges that the government's case was little more than harassment of a successful company. The company's confidence on this point was presumptuous, and the court did not reward it. It held, rather, that Microsoft was - as U.S. District Judge Thomas Penfield Jackson had earlier found - a monopolist that had serially violated the law, including through acts that the company deemed improvements to its products. The opinion, assuming the Supreme Court does not intervene, will now force the company to consider seriously the antitrust implications of future design changes that may serve to inhibit competition.
But the court also reversed both the weaker of Judge Jackson's liability findings and, more important, his incautious breakup remedy. Judge Jackson gave Microsoft no real chance to propose less dramatic alternatives or to present facts that would cut against a breakup. He made little effort to justify his remedy. And his extrajudicial comments disparaging Microsoft and its officers - comments the court termed "deliberate, repeated, egregious, and flagrant" - lent an air of bias to his action against the company. The court rightly sent the case back to a different judge to reconsider the question of remedy.
All of which leaves the original, and still very difficult, question: what to do about a software giant that has been both an engine of innovation and a squelcher of competition. Though the browser wars that gave rise to this litigation are long over, the dilemma is as relevant as ever. Microsoft's critics argue that the company is even now using the power of its operating system monopoly to corner new product areas. As the D.C. Circuit noted, either of the likeliest solutions - breaking the company or somehow monitoring its conduct - presents serious problems in a market that can change so completely and so fast. But after this opinion, it is clear that what to do about the Microsoft problem - not whether a problem exists - is the question at hand.