Ouster of Microsoft Settlement Met With Skepticism : Software: Rivals remain doubtful of the government's ability to halt alleged antitrust practices by the industry leader.


The surprise rejection of an antitrust settlement between Microsoft Corp. and the Department of Justice was greeted cautiously in the computer industry Tuesday, with many of the software giant's competitors remaining skeptical of the government's ability to stop allegedly anti-competitive practices by the software giant.

"I think I'll save the champagne," said Joseph Gugliemini, president of Apple and IBM joint venture Taligent. "If this turns out to be three years of appeals, who cares? I'm just going to keep my head down and get my product out."

"I don't think legal processes are anything to celebrate no matter which way they go," added Charles Geschke, chief operating officer of Adobe Systems Inc.

Few in the software industry were fans of the agreement between Justice and Microsoft, signed last July. The agreement was narrow, many said, placing some restrictions on how Microsoft licensed its operating system software but failing to address other crucial issues, such as Microsoft's alleged use of its position in operating systems to sell applications programs.

Since the decree was signed, moreover, Microsoft has extended its reach into new arenas. It plans a major presence in the on-line world with Microsoft Network, and would immediately assume a dominant position in electronic home finance if its proposed acquisition of Intuit Inc. is approved.

Indeed, industry fears of Microsoft's power have if anything grown in the months since the decree was signed. A group of Microsoft competitors, saying they were afraid of retaliation if they spoke out publicly, made a last-minute appeal to U.S. District Court Judge Stanley Sporkin to block the agreement.

"A year and a half ago when this thing was signed, the situation was a lot different," noted Gugliemini. "People thought the war wasn't over and that they could still duke it out with Microsoft. Now they know how hard that is . . . there might be more willingness to come forward."

The anonymous complainants, at least, were likely celebrating a big victory Tuesday. And Microsoft officials, who declined to comment until they had a chance to chew over the 45-page decision issued late Tuesday, were almost certainly huddling to figure out their next move. Believing its antitrust troubles were over, Microsoft had been moving aggressively in recent months, not only in acquisitions such as the Intuit deal but also in pushing its new operating software.

Some Microsoft rivals were hopeful that Sporkin's decision would eventually have real bite. "I applaud (Judge Stanley) Sporkin trying to protect the American way and he's taking a pretty tough stance," said Scott McNealy, chief executive of Sun Microsystems. "But this may turn out to be interesting and it may not be."

Lawyers who have followed the case, meanwhile, were amazed by the judge's decision.

Barbara Reeves, a partner specializing in antitrust litigation at Fried Frank Harris Shriver & Jacobson in Los Angeles said: "It is almost unheard of for a judge to reject a government settlement. It's quite a blow to them. The judge has said the government is not being the strong watchdog upholding competition that they're supposed to be."


Times staff writer Amy Harmon contributed to this report.


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