The government seems to have forgotten that. It seems to be out apparently to protect one competitor, Netscape. It is proposing remedies -- for which there is no violation of law -- that frankly, so far as I can tell, have never been proposed, even back in the '60s when antitrust was in its much wilder days, and when there wasn't an appreciation of efficiencies and what benefited consumers and the importance of competition.

BORLAND: You're referring to the suggestion that Microsoft actually package its competitors' product along with Windows.

"There are no cases that I can find that require one competitor to distribute the product of another for free."

RULE: Well, again, you have to look at the government's complaint. The government doesn't say, first of all, package competitors. It says package the dominant supplier of browsing software. It doesn't say it in those words, but it says only Netscape.

So what's very unusual is the government, for the first time I can ever recall, is launching litigation that's going to cost hundreds of millions of dollars on behalf of a single company that happens to be the dominant supplier in the market they're in. So that just sounds perverse. There are no cases that I can find that require one competitor to distribute the product of another for free.

BORLAND: How are the courts likely to respond to this?
RULE: Well, what's really amazing about this complaint is that it has been filed barely two weeks after the court of appeals in another context really addressed the question.

BORLAND: This dealt with the original consent agreement, right?
RULE: Right. A court entered a preliminary injunction essentially requiring Microsoft to allow PC manufacturers to hide the icon or remove that functionality that makes Internet Explorer accessible as a stand-alone browser to consumers.

But there was some ambiguity in the judge's order that suggested perhaps it applied to Windows 98. The Court of Appeals looked at the prospect of imposing that condition on Microsoft’s marketing of Windows 98, and said that one, neither the judge's order nor the underlying consent decree would allow that, because Internet functionality is clearly, tightly integrated into Windows 98. Two, the court went on to say that if the decree were read to impose such a requirement on Microsoft, it would "put the judges and juries in the unwelcome position of designing computers."

Clearly, the court of appeals found that inappropriate under an antitrust decree. But apparently, the government is ignoring these days the decision of the court of appeals, and I guess just designing computers in that way is not enough. They want to go whole hog, they want to decide all the functions that ought to be in the operating system, and all the other things that go with their proposed relief.

C O N T I N U E D . . . 2 of 2
BORLAND: Your expectation, then, is that the lower court in this case will apply the court of appeals' reasoning to Windows 98?
RULE: I think so. At first, the government, in order to prevail on a preliminary injunction, has to prove it has likelihood of success on the merits, that is that Microsoft violated the antitrust laws ... I don't think that they have a likelihood of success on the merits, so they may very well lose on that issue alone.

But even if they can convince a court that they have enough of a case to warrant going to the other issues, the government has to prove that there is irreparable harm from not entering the preliminary injunction they request, and that the balance of equities are on their side. And the irreparable harm, it's very hard for them to prove.

So the government, I think, is going to have a very hard time meeting their burden.

BORLAND: Is there political pressure acting on Joel Klein and Janet Reno? Is this a political case?

"I don’t think any of these cases are dangerous, because I believe that the law protects Microsoft just as it protects the least among us."

RULE: Well, notwithstanding, obviously my politics are very different from this administration. I am a proud alumnus of the Department of Justice, and I am a strong believer that they have an excellent reputation and record in terms of standing apart from political pressures.

So I don't think it was political. I do think there are certain pressures, not the least of which are competitors and others. I think it's probably based frankly on a sincere attachment to, but nevertheless a naïve attachment to, a set of economic theories that overlook reality, that overlook the central place of consumers in the antitrust laws and in the economy.

So it's really more of a kind of fuzzy-headed professorial or academics' case than something you could say is driven by politics. But of course that makes it no less destructive and harmful to consumers, and no less reprehensible for taking the approach of trying to protect a single competitor at the expense of the rest of the economy.

BORLAND: Is the states' case more dangerous? They're targeting the Office suite as well as Outlook 98 and other applications.
RULE: I don't think any of these cases are dangerous, because I believe that the law protects Microsoft just as it protects the least among us. Microsoft has conducted itself in a way that was far less arguably exclusionary than anything IBM did and was accused of doing in the 1960s and 1970s. But IBM defended itself and consistently won. So I have very little doubt that at the end of the day Microsoft will prevail on all of the claims, whether it has to do with Windows 98 or Office.

BORLAND: Is there a settlement that the Department of Justice could have come to that could have avoided this?
RULE: Absolutely. Microsoft indicated that it was willing to go more than the extra mile, and I'm convinced it was. But it's one thing to ask a company to go the extra mile, and it's quite another to ask them to walk off a cliff. That's really what the government was asking, and no company can afford to do that.