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The siege of Microsoft

As the Microsoft Corp. antitrust case rumbles back to life , late this month the U.S. Court of Appeals for the District of Columbia Circuit will hear oral arguments in the company's appeal , two new books arrive on the scene to explain the whole tangled saga.

As the Microsoft Corp. antitrust case rumbles back to life , late this month the U.S. Court of Appeals for the District of Columbia Circuit will hear oral arguments in the company's appeal , two new books arrive on the scene to explain the whole tangled saga.

By Jeffrey Kutler
February 2001
Institutional Investor Magazine

With reporting and analysis that rival the excellence of their timing, John Heilemann's Pride Before the Fall: The Trials of Bill Gates and the End of the Microsoft Era and Ken Auletta's World War 3.0: Microsoft and Its Enemies both chronicle how this civil trial is making history, as century-old antitrust statutes collide with still-evolving Internet technology. But they tell their tales from different perspectives that may appeal to different tastes.

Silicon Valley is the center of Heilemann's universe and the source of his best material. He is a correspondent for Wired, and his book is essentially the same long, breezy narrative that he wrote for the San Francisco,based magazine's November issue. His Washington, D.C., scenes are lively, but he really hits his stride in revealing the lengths to which Microsoft's competitors, led by Sun Microsystems and Netscape Communications Corp., went to convince the Justice Department to lower the boom on their giant rival.

Auletta tips his hat to Heilemann, citing the Wired article in World War 3.0, which is longer, more encyclopedic and more focused on lawyers, maneuverings, both in and out of court. A writer for The New Yorker whose books include Greed and Glory on Wall Street, Auletta explains how Microsoft managed to antagonize the press, politicians, prosecutors, judges and such powerful CEOs as Walt Disney Co.'s Michael Eisner and America Online's Stephen Case.

Both books conclude, as Heilemann's title makes explicit, that Microsoft's arrogance, indifference to its public image and innate suspicion of government , qualities directly attributable to chairman Bill Gates , presaged the decision by U.S. District Judge Thomas Penfield Jackson to break the company in two. Gates performed disastrously in a videotaped deposition, and his Sullivan & Cromwell lawyers, ineffective witness lineup sealed his fate.

Both writers capture behind-the-scenes dramas that will inform and entertain even those who have closely followed media accounts of the trial. Heilemann reports that in 1994 Gates tried to hire James Barksdale, who as Netscape CEO would later become his most aggrieved Silicon Valley attacker. And while Sun and Netscape organized their anti-Microsoft cabal in early 1998, they were also discussing a merger.

The many clashes among competitors and legal teams provide an endless lode of controversies to mine, and enough combative and talkative personalities to require a scorecard, which is lacking in both books.

Auletta does include a useful chronology and glossary. He gives extensive explanations of the Sherman Antitrust Act of 1890 and explains concepts like the alleged illegal tying of Microsoft's Windows operating system to its Internet Explorer browser. Auletta also adds an important legal dimension: an e-mail correspondence with Richard Posner, the Chicago appellate judge whom Jackson asked last year to mediate a settlement between Justice and Microsoft. Posner confirmed Auletta's hearsay reconstruction of a four-month process that generated 19 proposed settlement drafts.

In the end, said Posner, the disagreements were "too deep-seated to be bridged." Ironically, Microsoft was too hardheaded , "hard-core," in Auletta's words , to agree in May 1998 to settlement terms far more favorable than those offered two years later.

Neither author predicts how the final act will end. Surely Microsoft will pull out all stops in its appeal. And the Bush administration is not likely to share the Clinton crowd's prosecutorial zeal. Still, as Heilemann points out, 19 state attorneys general joined in the suit, and it takes only one to continue the appeals process "to the point of its exhaustion."

Auletta predicts that "Microsoft may be doomed to lose even if it ultimately wins in the courts, for this debilitating case may rob the company of the drive and passion that contributed to its extraordinary success."

Take your pick of outcomes , and books. These are both first-rate.