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Excerpts from Microsoft Appeal Hearing
Associated Press

TATEL: ... So to the consumer who wants Navigator or some other browser, it isn't free.

UROWSKY: Well, the cost of Navigator, once it faced serious competition, was zero.

TATEL: Oh, I understand. I'm talking about the cost of the time it takes to get it. I mean, it may be not much, but there may be consumers who are sufficiently discouraged from downloading it so that they don't do it.

UROWSKY: There are many ways other than downloading to secure it, and there is every reason to believe that any computer user that wanted that product could get it.

With great respect, Your Honor, there are three central economic characteristics of software distribution: It's easy, fast and cheap. Those aren't technical terms.


WILLIAMS: I understand that you're arguing that there are different contract clauses between Microsoft and the other producers, but the basic theme, it seems to me ... are competitive sellers also bundling the item? If they are, the belief is that competition is taking care of this, and the forcing that is going on, the fact that people find themselves in possession of one maker's product, is therefore innocent, or at least not covered by per se.

ROBERTS: I think that's the critical point. And it's a difference between bundling, combining and forcing.

There is no problem with Microsoft putting together the operating system and the browser and offering it as one package. The problem ...

WILLIAMS: That act alone, in terms of the pricing concerns that have historically driven tie-in law, ends the case. You're moving into new territory of a peculiar situation, where the defendant has said, in a sense, "You can't throw it away, or we're going to make it slightly hard for you to throw it away; you're going to have to move the icon on your machine." But that kind of thing has not driven tie-in law at all. You're taking tie-in law into new and interesting territory.


EDWARDS: ... I mean, this is one of the places for me where the failure of the findings of fact to point to any record citations makes it very, very difficult on appellate review, because there are very conclusory statements here that I tried to trace to determine whether there was any real data to support the observation that there is a market for browserless operating systems. It's certainly not intuitive, given that all of the operating systems offer browsers that can be removed or deleted.

But, you know, see, in making your argument that in all the other cases they can be removed, and therefore, Microsoft is forcing, you're ignoring Microsoft's counterargument, which is they don't integrate as deeply.

But in any event— make that your second answer — tell me if there is any data to back up — I hear my colleagues, in the first part of this argument, that we are supposed to defer to factual findings, but when I find factual findings that look very conclusory and there's no citation to anything, I don't think my obligation as an appellate court is to defer to them. So what is the data?

ROBERTS: I would refer the court, primarily, to the government's proposed findings of fact, which are, sort of, an annotated compilation of the evidence that supports the proposed findings.

I remember, offhand, the Boeing example. There is testimony from Boeing, "We want a browserless ..."

EDWARDS: Is there anything other than Boeing, because that's the ...

ROBERTS: Yes, I cited, it's the one I recall. They're detailed in the proposed findings of fact. I think that's where I would look to find the underlying evidence.

I don't understand Microsoft to contend that those findings are clearly erroneous. What they contend is ... beside the point, because they have a different focus. They say, "We're going to put these together, and because there are benefits, it's not separate products." And that approach has been definitively rejected by the Supreme Court.


ROBERTS: ... Our point is that there should be competition to decide what is the browser that consumers want. And Microsoft was unwilling to engage in that competition. And we know exactly why. They said so in their documents, "We're not going to win." So we have to, quote, "It's important to leverage the OS asset to make people use IE instead of Navigator."

Now, if they don't know that Navigator would be a better choice, that doesn't mean that the benefits of competition are not also lost to them, because Microsoft is leveraging the OS asset to make people use IE. It would have been perfectly all right if they'd offered the package and said, "You can compete." But by ...

WILLIAMS: You just answered his question, Mr. Roberts. Is there loss of consumer surplus when the consumer doesn't know it? I guess that's the question.

ROBERTS: I guess my answer would be yes. I mean, there is no great benefit to ignorance. And there is a loss of competition, and the harm...

WILLIAMS: But the consumer can't have a loss of something that it values if it doesn't know that it exists. ^END=

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