Most educators who spoke with eSchool News the day after a June 28 appeals court ruling overturned the court-ordered breakup of software giant Microsoft Corp. said they were surprised by the ruling and saw it as a possible blow to technology choices in schools.

The U.S. Court of Appeals for the District of Columbia Circuit unanimously overturned the breakup of Microsoft but ruled that the company did violate antitrust laws. In a rare rebuke, the appellate judges said the trial judge “seriously tainted” the case with his derogatory comments about Bill Gates and his empire.

The appeals court decision has broad implications for all segments of society, including schools, where investments in technology stand to gain or lose from the fate of the industry leader.

“Educational technology is growing geometrically. The dollars spent on technology in my district have nearly quadrupled in the past four years,” said Larry Leverett, superintendent of Plainfield Public Schools in New Jersey.

According to Leverett, the decision to support the Microsoft monopoly places education squarely in the hands of an industry ruler who will continue to manipulate price and product.

“Why is it that competition and market-driven solutions are being espoused for schools, but large trusts are permitted to prevail on the business side?” he said. “Education will pay the price for this ruling.”

Jean Olmstead, technology instructional coordinator at Indian Oasis-Baboquivari Unified School District in Arizona, also was disappointed in the ruling.

“It puts too much power in the hands of one company,” she said, adding her fear that Microsoft now will be able to force competitors like Apple, Sun, and Cisco out of business.

“Internet access will soon be limited to [Microsoft Internet] Explorer,” she said. “The possibilities for total control of the world’s computers is not that far-fetched. [The ruling] means total control of education, also.”

Both Leverett and Olmstead said they believe the current political climate influenced the ruling.

“Clearly the interests of the consumer were ignored by this ruling,” said Leverett. “I fear that this will be typical of the big business privilege during the Bush era.”

Not all educators were concerned about the ruling. Some hailed it as a victory for the compatibility of software applications that run in schools.

“In my honest opinion, [the ruling] is good for schools and the tech world because it will allow for easier applications to be developed and [allow for] standardization,” said Lorraine Smith, a librarian at St. Gabriel’s Catholic School in Austin, Texas.

“Even if Microsoft were split [into two divisions], it would still be the same company, essentially, but it would have to duplicate efforts and that would actually drive costs up,” she said.

Rich Molettiere, technology coordinator for Nebraska’s Omaha North High School, said some kind of punishment for the software giant is still possible.

“The important point to remember is that the ruling was vacated-thrown out-but [the case] will be sent to a different judge. Microsoft was still found guilty of monopolistic practices. Future remedies are still possible, as is an agreement between Microsoft and the government,” Molettiere said.

Although the U.S. District Judge Thomas Penfield Jackson engaged in serious misconduct, the appeals judges said, “We agree with the District Court that the company behaved anti-competitively … and that these actions contribute to the maintenance of its monopoly power.”

The appellate court narrowed the antitrust case and sent it to a new judge to decide whether a breakup or some other penalty is warranted for Microsoft.

Microsoft’s stock shot up, as did the spirits of company executives who pressed ahead with plans for their new Windows XP operating system and internet services with a promise to continue innovation.

“Every company must have the ability to innovate and improve its products,” Gates said from the company’s Redmond, Wash., headquarters. But the world’s richest man conceded, “The legal process can be hard on anyone who goes through it.”

The Justice Department and state attorneys generals who brought the case also found victory in the conclusion that Microsoft operated an illegal monopoly. But the government and states might still appeal to the Supreme Court, try to negotiate a settlement or go back to the lower court to seek new penalties.

Political pressure mounted for the Bush administration to seek a settlement.

“This gives this administration the opportunity to settle the rest of this case so all high-tech companies can move forward,” said Sen. Patty Murray, D-Wash. House Majority Leader Dick Armey, R-Texas, said it was time for the government to “get off the back” of companies like Microsoft.

Iowa Attorney General Tom Miller, a leader of the 19 states that launched the case, said his colleagues were open to a settlement if it brought “fundamental change about how Microsoft conducts itself.”

The seven appellate judges narrowed the number of antitrust violations against Microsoft, upholding Jackson’s conclusion that the company illegally dominated the market for computer operating systems.

But the judges threw out the allegation that Microsoft illegally gained a web browser monopoly, and they sent back to the lower court the question of whether Microsoft improperly bundled its Windows operating system with its web browser.

The appellate judges saved their wrath for Jackson, citing his comments as the reason they vacated his order breaking up Microsoft. Before he ruled, Jackson gave interviews in which he likened Gates to Napoleon and Microsoft to a murderous street gang.

The judge’s remarks “would give a reasonable, informed observer cause to question his impartiality in ordering the company split in two,” the appeals court said.

“Although we find no evidence of actual bias, we hold that the actions of the trial judge seriously tainted the proceedings before the District Court and called into question the integrity of the judicial process,” the court added in an unusually harsh criticism of a fellow jurist.

Former federal prosecutor Lawrence Barcella said the removal of Jackson from the case was extraordinary. “That is a rare, rare public rebuke,” he said.

Jackson did not return telephone messages to his office seeking comment.

A new judge will be assigned to the case. The appellate court said the new judge must reconsider whether a breakup is warranted given the narrowing of the findings. “On remand, the district court must reconsider whether the use of the structural remedy of divestiture is appropriate,” the judges said.

In asking the lower court to reconsider the issue of whether Microsoft’s decision to bundle Windows and its web browser, the appeals judges said they were concerned about stifling innovation.

Gates said the ruling sets a high bar for the government when it seeks in the future to block features from being included in software products.

Analyst Neil McDonald of Gartner Group, a high-tech consulting firm, said the decision could embolden Microsoft to proceed with bundling new products in its Windows XP operating system and its .NET suite of internet products. The attorney generals are already studying those plans.

The case “has not had a significant effect on Microsoft’s business strategy,” McDonald said. “The bundling and tying of new products was continuing.”

The case was brought against Microsoft by the Clinton administration. During the presidential campaign, Bush expressed hope that any settlement “won’t ruin this company because this company has been a very interesting innovator.”

Bush was mum on the June 28 ruling, and his Justice Department gave no hint of its plans. “This is a significant victory,” Attorney General John Ashcroft said, praising the career lawyers who worked the case.

Charles James, the Justice Department’s new antitrust chief, said the key to the ruling was that the judges agreed that Microsoft has monopoly power and acted unlawfully to preserve it.

Connecticut Attorney General Richard Blumenthal said he didn’t know whether the Justice Department and the states would stick together as the case proceeds. “I am extremely hopeful that our team will remain intact,” he said.

New York Attorney General Eliot Spitzer opposed making concessions to Microsoft. “There is nothing in this opinion that would justify a revised perspective on this litigation,” he said.

Jackson ruled that Microsoft illegally thwarted competitors and violated antitrust laws. In June 2000, he ordered that Microsoft be split into two separate companies as punishment to ensure the company couldn’t continue its anti-competitive practices.

Microsoft appealed, honing in on the comments Jackson made to reporters in interviews before he ordered the breakup.


Microsoft Corp.

U.S. Department of Justice

U.S. Court of Appeals for the District of Columbia