Microsoft Essay, Research Paper
- Legal_Issues – Microsoft and mediation negotiations -
Microsoft and mediation negotiations
By: Steve
Since its antitrust trial began in 1998, the software giant
Microsoft and the government have met in negotiations three
times; now, a fourth round of mediation has been scheduled,
these to be presided over by Richard Posner, the chief judge
for the 7th U.S. Circut Court of Appeals in Chicago. Although
the two sides differ in opinion on many key issues, both sides
have maintained that they are open to settlement. The
appointment of Posner has aroused some controversy however,
because some, including William Kovacic of George Washington
University, say that his views on antitrust cases are not in
line with the governments; that is, they do not favor the
breaking up of large firms found to be monopolies. Microsoft
was determined to be a monopoly in a fact finding by Judge
Thomas Penfield Jackson performed three weeks ago. The
movement towards mediation and away from traditional
adjudication is an example of alternative dispute resolution
(ADR), which is becoming increasingly common in modern
society. While alternative dispute resolution programs were
previously found mainly in local, informal settings,
Mediation programs are more and more attached to existing
court systems or social service agencies rather than community
or neighborhood groups. (Merry, 1984) Because the mediator in
the Microsoft case was appointed by the trial judge to oversee
settlement talks, the mediation was explicitly linked to the
existing court system. Mediation is being used as a tool by
the trail judge to avoid a long and costly trial. Galanter, as
cited by Merry, says that while the procedures used by the
court and mediations may differ greatly, the authority claimed
and the form of social control exercised do not. That is, when
Microsoft and the government enter into settlement talks, led
by Posner, his authority in the mediation will not
significantly differ from his authority assumed while
presiding over his courtroom as a judge. He will retain
approximately the same power over the litigants. Galanter goes
on to say that the formal legal system is expanding its use of
ADR, including judicial mediation. As can be seen in this
case, the two forums of dispute settlement, formal and
informal, are not completely separated. The formal court
system has incorporated the informal method of mediation with
a slight twist; the mediator is a member of the formal legal
system. The fact that Posner is a judge and a member of the
formal legal system is of great importance. The principle
contribution of the courts to dispute resolution is providing
a background of norms and procedures against which
negotiations and regulation in both private and governmental
settings take place. (Galanter, 1984) Because Posner is a
part of the court system, he is in an ideal position to
establish such norms and procedures; he works with them every
day and is familiar with their operations and applications.
His knowledge of the court system will also be integral in the
negotiations as applicable to what Galanter refers to as
bargaining endowments, or what each side can use to his
advantage in negotiations. Posner will be able to identify the
bargaining endowments of each side, because he knows what the
probable outcome of formal adjudication would be, and let both
Microsoft and the government use these during the
negotiations. For example, if Posner knows that formal
adjudication will probably result in the prohibition of
Microsoft to distribute their browser for free in the future
and that they will also be broken up into two or more smaller
firms, this would be a bargaining endowment for the
government. They would use the probable outcome of a court
trial to their advantage in informal negotiations. In this
example the government could offer Microsoft the chance to
remain as one complete unit instead of splitting into two or
more smaller ones, in exchange for ceasing to give away their
browser. By employing such bargaining endowments, mediations
are said to be taking place in the shadow of the law. This
means that each side bears in mind what could happen in court
throughout the negotiations. Posner s appointment as mediator
will amplify this effect because his presence as a US district
court judge reminds both sides of the possible outcomes if the
case were unable to reach an agreement in mediation and had to
return to court. Another important factor in the Microsoft
antitrust case is the frequency with which Microsoft and the
government interact with one another. Because Microsoft is a
forerunner in a pioneer industry, the government constantly
keeps watch over its operations, trying to ensure that its
business practices are both fair and legal. This necessitates
taking the firm to court when the government questions the
legality of the operations or actions of Microsoft. This
frequent meeting in court fulfills the first of three
requirements for a party to be known as a repeat player, that
the unit has had and anticipates repeated litigation. The next
two requirements are also met by both Microsoft and the
government; both have relatively low stakes in the outcome of
any one case. For the government, the loss of this case will
not result in any significant revenue declines. If Microsoft
loses, they could be forced to sell their browser instead of
giving it away, which could only increase revenues. The firm
could also be broken up into several firms, but the owners of
Microsoft would retain ownership of the new companies. The
third requirement, that a party has the resources to pursue
its long term interests, is also met by both the government
and Microsoft, who employ full time lawyers as part of their
regular staff. (Galanter, 1975) The status of both of the
litigants as repeat players has a large impact on the
preferred means of dispute settlement in this particular case.
Because the two parties have similar resources and goals and
will face future litigation, informal resolution, such as
mediation offers both a less hostile environment and one more
conducive to compromise. The development of informal
relations between regulatory agencies and the regulated firms
is well known. (Galanter, 1975), and accordingly, Microsoft
and the government have developed a set of relations that are
mutually beneficial. To fight out their differences in court
would leave both bitter and any dealings with each other in
the future hostile. Because the conflict is one of interest
and not of dissensus, there is more incentive to settle. Both
the government and Microsoft will benefit from the continued
operation of the firm; thus, they have the same goal, but
disagree on how best to achieve it. Such a conflict of
interest lends itself to the compromise model , in which the
establishment of guilt is not at issue and also where the two
parties involved in a dispute look forward to a relationship
with each other in the future. The compromise model stresses
compromise and agreement which is best achieved not through
the formal court system, but through informal means of dispute
resolution such as mediation.