Governments just don't move as fast as markets, even if you believe that government intervention is justified, and I don't. They [Microsoft] already got what they came for. What's Netscape Navigator's market share now?

I think hackers in general have always suspected that what the government did would turn out to be irrelevant. But it's also worth noting the way that the initial media reaction to this is missing a few key points.

One is that the appeals court actually affirmed the findings of fact, the finding that Microsoft has abused its monopoly power. The only thing that got returned was the specific remedy. The obvious consequence is that we're simply going to have another judge reasoning from the same findings of fact to develop a remedy. The un-obvious consequence, and the reason you don't see the Microsoft executives jumping for joy, is that anybody who wants to mount a private antitrust lawsuit against Microsoft now has an open-and-shut case.

Now this is something that knowledgeable commentators pointed out six months ago, which is that even if the appeals court overturned Jackson's findings of law, it would be very difficult, procedurally, for them to overturn his findings of fact. In effect, what the appeals court has said is "Well, we accept Jackson's findings of fact; what we don't accept is his specific remedy."

The real problems that Microsoft faces are problems that are basically irrelevant to how a government court rules. Prominent among these problems is the fact that Microsoft's entire business model is sustained by fat margins in the hardware market. As those margins erode what's happening is it's becoming more and more difficult for OEMs [original equipment manufacturers] to justify paying [for Microsoft's OS]. It makes sense if you're buying a machine and your price is 2,500 bucks, then, OK, fine. Paying 80 bucks to Microsoft for the right to install Windows, well then fine. But when the prices get down to $500-$600, which is where the aggressive prices for machines are nowadays, $80 is beginning to look significant. and when you get down below $350, you just can't make any money on the Microsoft tax anymore.

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The hardware market is changing in such a way that Microsoft's model is looking less and less attractive. And Microsoft is demonstrating in its behavior that it knows this. The recent moves about .Net and all this stuff about talking up cross-platform operability and so forth, these don't make any sense unless Microsoft believes that its packaged software business is not long for this world.

James V. DeLong, senior fellow, Project on Technology and Innovation at the Competitive Enterprise Institute:

Overall, the court's decision in the Microsoft case is a victory for the company and the high-tech industry as a whole. In rejecting Judge Jackson's quick-trigger-finger decision to break up Microsoft, the appeals court emphasized that the remedy of a breakup should be a rare beast in antitrust, and that the usual response should be an injunction against illegal conduct, not vivisection without benefit of anesthetic. Today's decision is a win for the entire industry because it says courts should not meddle at random with business structure.

Ken Wasch, president, Software and Information Industry Association:

I don't understand how they can say that this is a victory for Microsoft. [Microsoft] didn't get the death penalty, but the conviction was upheld.

Judge Jackson made a mistake in not holding a hearing in the remedies phase. I think he should have done it; I think most people think he should have done it, and now it's going to be ordered. But I don't think a breakup is off the table by any means.

The court of appeals affirmed Judge Jackson on a range of findings of fact and on monopoly maintenance and it's up to a new judge to determine what remedy will correct these violations. It's by no means clear that conduct remedies alone will ever work.

Stephen Houck, former lead trial counsel for plaintiff states suing Microsoft, and a partner at Reboul, MacMurray, Hewitt, Maynard & Kristol:

It's a very significant victory for the government. The judges held up the monopolization claims, which were really the meat of the case.

As for the state attorney generals, they've always been in the forefront of the effort to get some practical relief that will impede Microsoft's actions. This will strengthen them in that motivation. This gives them plenty of ammunition. Of course, if Microsoft settles [with the Department of Justice], the states will continue to be a party [to the settlement]. It's possible that the settlement -- and this is all speculation -- could offer relief that will be acceptable to both to the states and the federal government. But the states will continue to impact the resolution and this decision does support them if they determine that the federal relief is not adequate.

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