SEATLLE, NOV 14: The dust is settling in the anti-trust battle between Microsoft Corp. and the Federal Government - and the software giant is in a lot more trouble than people thought it would be.Sure, Microsoft keeps noting that US District Judge Thomas Penfield Jackson's findings of fact are just the first step in what may be a long process. But the more realistic folks in Redmond have to be wondering if the road ahead, to borrow a phrase, isn't going to be an awfully hard one. If Microsoft has embarked on a corporate Bataan Death March, why is it comforting that it's only taken the first step?Microsoft's hope is that an appeals court will treat the judge's findings the way it treated his requirement - now nearly two years old, believe it or not - that Microsoft stop requiring PC makers to include Internet Explorer with Windows 95. That injunction was struck down in June 1998: The three-judge panel of the US Court of Appeals for the DC Circuit ruled that Judge Jackson made procedural andsubstantive errors in issuing it, and said it was inclined to view the combination of Windows 95 and Internet Explorer as an integrated product.That was a big victory for Microsoft, but things aren't so simple now. The findings of fact can't be overturned unless they're found to be "clearly erroneous." True, the appeals court could revisit the product-integration question if it feels strongly enough that Judge Jackson erred in his conclusions. It could also find that the judge's definition of the PC market computers running chips made by Intel Corp. - is too narrow, a point Microsoft made numerous times in that trial. Yes, the court had substantive objections to Judge Jackson's preliminary injunction, but that injunction was based on a lot less time in the bench listening to the evidence. For Microsoft, relying on such a rescue has to be considered dangerous in the extreme.Could Microsoft settle? On the one hand, there are long-term legal reasons to do so. Until a final judgment appears, JudgeJackson's finding that Microsoft has a monopoly in personal-computer operating systems is basically just bad PR. But a ruling that Microsoft violated anti-trust law by using that monopoly to choke off competition would unleash a deluge of lawsuits, with Microsoft vulnerable to triple damages under anti-trust law.On the other hand, Judge Jackson's findings were so strongly almost exclusively, in fact in favor of the government's side that Microsoft may not see common ground for a settlement it could live with. Witness Microsoft Chairman Bill Gates, who went from insisting there had to be a way to settle last week to insisting this week that Microsoft wouldn't give up its control over how PC makers display Windows.And there's another complication: The 19 states in the case are equal plaintiffs with the Justice Department, so just one of the attorneys general could scuttle a proposed settlement.Then there's another wild card: the prospect that the Federal Government could try to skip the appeals courtaltogether. Under an obscure statute, a major anti-trust case can go right to the Supreme Court if the judge certifies it is of great public interest and gets a petition from one of the parties. Is that likely? Well, the first condition - public interest -certainly seems to apply. The Justice department made much of the fact that it doesn't intend to let this case drag on the way the action against International Business Machines Corp. did, which is another "yes" vote. And finally, the government would seem to have an obvious reason for wanting to skip the appellate court. The scenario has generated a lot of interest of late, and while there's probably a reason the statute in question is so obscure, it's certainly another thing to watch.
