A quick peek at antitrust trial costs so far

One of the most difficult parts of the Microsoft antitrust litigation for observers to follow -- outside the legal issues, of course -- is nailing down the price tag for what amounts to vast legal armies duking it out over a several-year period. We don't have a final answer, but we did dig up some snippets of data that should provide some perspective on estimating the overall cost of this case:

MICROSOFT'S COSTS

From Microsoft's Form 10Q statement for the quarter ended March 31, 2001, filed May 15, 2001:

General and administrative costs were $239 million in the third quarter compared with $185 million for the same quarter last year. General and administrative costs increased from last year's third quarter due to higher head-count-related costs and legal fees. General and administrative costs were $621 million in the first nine months compared with $847 million for the same period last year. In the December quarter of 2000, general and administrative costs included a charge related to the settlement of the lawsuit with Caldera Inc.

STATE'S COSTS

Citizens Against Government Waste (CAGW) President Thomas A. Schatz estimates that to date, more than $35 million in tax dollars has been spent on the Microsoft case. "The Microsoft case has put taxpayers on the hook for at least $35 million in costs at the federal and state levels," Schatz added. "Additionally, economists have estimated Microsoft's breakup could cost consumers $60 billion in higher software costs."

Schatz also claims that Iowa state attorney general Tom Miller, leader of the states' case against Microsoft, has already spent more than $1 million on the litigation. In fall 2000, the 19 attorneys general filed a claim for fees and expenses for a total bill of $15.4 million -- 560% greater than indicated in their responses to CAGW's Freedom of Information Act requests last year, according to a column Schatz wrote in the Chicago Sun-Times.

The 19 states in the case signed a joint agreement in 1998 that assessed the states, based on population, $1.7 million to cover the nonhourly charges or travel and expenses for administration costs associated with prosecuting the case, and that Illinois would be responsible for the fiscal matters. The costs are based on a formula, by which each attorney general or an equally experienced top attorney in his office could charge $400 per hour. In nine states, including Illinois, the attorney general personally billed hours for the case. In two states, New York and Wisconsin, the $400-an-hour charge was obtained by someone other than the attorney general. At the low end were paralegals, analysts and investigators at $85 per hour. Illinois spent 4,268 hours on the case, costing $1 million.

SHAREHOLDER IMPACT

According to the 335,000-member National Taxpayers Union, a longtime critic of the antitrust proceedings against Microsoft, one day after the court's "finding of law" on April 3, 2000, Microsoft shareholders lost $80 billion in assets as share prices tumbled.

INSURANCE COSTS

From the New York Daily News, April 22, 2000:

One of the Microsoft's insurance providers, Zurich American Insurance, has filed a lawsuit in an effort to avoid having to pay any damages or settlement costs of legal fees as a result of antitrust actions against Microsoft or its executives. Zurich American, part of Switzerland's Zurich Allied, has an obligation to pay legal costs of up to $4 million on behalf of Microsoft, though there is no cap on lawyers' fees. Microsoft has already begun submitting insurance claims for the cost of defending some 140 private lawsuits that have been filed against it, and the company has countersued Zurich American.

GOVERNMENT COSTS AS OF 1999

In October 1999, the Justice Department said it had spent $12.6 million, less than one-tenth of 1% of its budget for such matters, in litigation against Microsoft Corp. since late 1989. The following fiscal year, through Feb. 26, 1999, it spent $1.62 million on the case. These figures include about $7 million investigating and suing Microsoft in the trial pending before U.S. District Court Judge Thomas Penfield Jackson. The department's antitrust division has spent $4.8 million litigating the case in fiscal 1998. The department provided information on costs in answer to questions from Sen. Slade Gorton (R-Wash.). -- Reported in The Washington Post, October 7, 1999.

Compiled by Mari Keefe

What do you think? Post your opinion in our interactive forum. (Note: Anyone can read messages; free registration is required to post. To register on Computerworld's forums, click here).

Related links:

Copyright © 2001 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon