Microsoft And Mediation Negotiations Essay, Research Paper
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.