August 9, 1999
Investigator of Microsoft Unrelenting in His Pursuit
By STEVE LOHR
he marquee stars of the government's antitrust assault on the
Microsoft Corp. have been David Boies, the trial lawyer who proved
a master at catching Microsoft witnesses off-guard, and Joel Klein,
the chief of the Justice Department's antitrust division.
Yet the outcome of the government's case -- win or lose -- will
largely hinge on whether the federal courts are impressed by the
work and judgment of Phillip R. Malone.
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Justin Lane for The New York Times
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Phillip Malone led the Justice Department's investigation of Microsoft.
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The 40-year-old senior staff lawyer in the Justice Department's
San Francisco office led the agency's investigation of the software
powerhouse.
It was Malone and his San Francisco team of "hawks" on the
Microsoft issue, according to people involved in case, who strongly
urged Washington to file a major antitrust suit against the
company. After internal debate and review, Klein eventually agreed
with the San Francisco recommendation and the Justice Department
sued Microsoft in May 1998, joined by 20 states.
Then, before the start of the trial in October, Malone managed
the campaign to add new evidence to the case and crisscrossed the
country taking dozens of new depositions. He also coordinated the
government's trial preparation, a painstaking effort that paid off
repeatedly in the courtroom during the eight months of witness
testimony.
"The case that has been presented is Phil Malone's case,"
Boies observed. "Take Phil and his San Francisco staff, and this
case could have progressed without anyone else -- and that includes
me. It may not have been quite as dramatic in the courtroom, but
the case would have been the same."
The next step in the Microsoft case occurs Tuesday, when each
side presents the court with its "proposed findings of fact."
These amount to legal storytelling, as each side presents its view
of the facts established in the trial citing witness testimony,
e-mail or documents. And they will be tomes; though still being
edited at the end of last week, the government draft was nearly 800
pages, and Microsoft's was about 250 pages.
The evidence cited will not be new. But these documents are
efforts by both sides to organize and present the evidence to Judge
Thomas Penfield Jackson, giving him a source book and a lens for
viewing the case. The two sides, of course, will present very
different views. And there is more to come, with both sides
scheduled to submit revised findings of fact next month.
Malone, once again, is at the center of things. He and his San
Francisco team found the facts the government is presenting as
evidence, while Microsoft is rebutting them as hearsay, irrelevant
or inconsequential in an antitrust case. Even Microsoft concedes
that its witnesses got roughed up and occasionally embarrassed by
Boies during the trial. But with the focus now turning to a cool
assessment of the testimony, evidence and law, Microsoft's legal
team insists that the advantage is shifting to their side.
In short, they much prefer opposing Malone's case on paper than
opposing Boies in the courtroom.
"It was good theater in the courtroom, but the government left
vast portions of our direct testimony untouched," said William
Neukom, Microsoft's general counsel. "And this is our opportunity
to tell our story based on the unchallenged facts in the case."
The Microsoft story is that contrary to the government's
allegations, it has not illegally used the market muscle derived
from its control of desktop personal computer software to stifle
the challenge from Internet software. Consumers, Microsoft said,
benefited from its decision to fold Internet browsing software into
its industry-standard Windows operating system.
The government's view was perhaps most cogently expressed by a
senior Justice Department official in the hallway of the federal
court building in June. After a morning of testimony about
Microsoft's reported arm-twisting tactics, the official told a
colleague, "If that stuff isn't illegal, we should shut down the
Justice Department."
Malone was largely responsible for making that the received
wisdom within the Justice Department -- though, of course, the
policy decisions are not made by the staff but by the top
appointees in the antitrust division, Klein and A. Douglas Melamed,
the second in command.
With the case still pending, Malone will not discuss the
investigation in detail. But he did say that it was the
accumulation of evidence -- and not any single episode or document --
that persuaded him that Microsoft had gone too far. "It was the
mountain of evidence, all those Microsoft e-mails keep coming back
over and over again to the same theme," Malone said. "Its own
documents make it very clear that Microsoft knew what it was doing
-- protecting its monopoly."
Malone is regarded within the Justice Department as one of the
top staff lawyers in the antitrust division. Colleagues describe
him as soft-spoken, focused and driven. He grew up the son of a
railway technician in Thoreau, N.M., a rail stop and logging town
of 500 people at the time, and then made his way to Harvard
University as an undergraduate, before getting his law degree at
the University of Arizona and joining the Justice Department.
He seems to thrive on a grueling work regimen. During the course
of the Microsoft investigation, Malone would often be called back
for one-day meetings at Justice Department headquarters in
Washington. His routine, colleagues said, was to work the day in
San Francisco, take the overnight flight to Washington, work the
day in Washington, take the red-eye that night back to San
Francisco and show up early for work the next day. Klein calls
Malone the antitrust unit's Cal Ripken, referring to the ironman
infielder for the Baltimore Orioles.
Malone, who is single, bought a house in San Francisco last
August. But the moving boxes remain mostly unpacked, since he has
been back to see it only three times on brief visits, he said,
because he has spent the last year in Washington for the trial.
Since he took over the Microsoft inquiry in 1996, Malone has
pursued the company with an intensity and stamina others find
remarkable.
Christine Varney, a lawyer who worked for Netscape
Communications, recalled Malone asking for a briefing from software
engineers on how Microsoft melded its browser into the Windows
operating system. The Silicon Valley session in the fall of 1997,
Ms. Varney recalled, began late in the day and lasted eight hours,
with Malone quizzing the programmers with detailed questions.
"I was astounded by his depth of knowledge of the technology
and the industry," Ms. Varney said.
The Microsoft legal team is also impressed by Malone as a
hard-working investigator. But they said that his knowledge of the
industry had been a one-sided tutorial administered by Microsoft's
enemies.
There is a genuine cultural divide between the Justice
Department's staff lawyers, like Malone, and the Microsoft legal
team from Sullivan & Cromwell, an elite law firm. The culture gap --
different worlds of affluence and attitudes -- add a certain edge to
their confrontation. Members of the private firm are the ones with
the half-million-dollar-a-year partners' salaries, who ride in the
front of the plane, wear expensive suits and stay at four-star
hotels. Malone is paid about $100,000 a year and while in
Washington rents a room with a kitchen. But he said he has never
regretted not taking the more lucrative path in the private sector.
"This is what I love doing," he said. "You take a case,
investigate it and file it because it is the right thing to do, not
because some client paid you."
As the government's walking encyclopedia of the Microsoft case,
Malone also plays a key role in the occasional settlement talks
between the two sides. "You don't want to have detailed settlement
talks without Phil in the room because he's the one who really
understands things," one person involved in the case said.
If no settlement emerges and the trial concludes, the appeals
process could take two years or more. By then, Klein, a political
appointee, and Boies, a renowned litigator hired to present the
case against Microsoft, will most likely have moved on, legal
experts say.
"Of the whole group, the guy who will still be around in two
years or so will probably be Phil Malone," said William Kovacic, a
law professor at George Washington University.