Microsoft prepares defence

Microsoft is preparing to mount a legal defence in its antitrust trial, arguing that the case threatens to overturn a generation of case law if the judge finds it has acted illegally.

Most lawyers expect the judge to find that the world's largest software company has violated antitrust laws.

Microsoft believes any ruling that it broke the first two sections of the Sherman Act of 1890 (preventing restraint of trade and monopolisation) will be out of step with a series of cases and legal treatises since the 1960s.

Microsoft and the justice department are a long way from finalising their legal arguments. The court has ordered the government to file its proposed conclusions of law in a month, while the firm has until mid-January to submit its arguments. The judge's rulings are expected in March.

But independent lawyers argue that Judge Jackson's findings point towards an application of traditional antitrust principles to the high-tech industry, rather than a radical departure in anti trust doctrine.

Mr Joseph Angland, antitrust partner at Dewey Ballantine, said: "What is striking in this opinion is that while it applies antitrust law to a relatively modern market, the antitrust analysis is not at all novel." For instance, Mr Angland cites the judge's rulings about Microsoft's harmful impact on innovation. While seeming novel, the arguments about innovation in fact tally with government guidelines on research and development for most of the 1990s, as well as earlier antitrust law.

Microsoft has consistently argued that the government's case is based on new theories of so-called "network effects". These suggest that technological dominance is based on widespread usage, which prevents newcomers from entering the market. But Judge Jackson argued forcefully that Microsoft's monopoly based on its Windows operating software is reinforced by the "network effect" of its large number of users and other software designed to run on it.