Microsoft Rivals’ Motives Questioned

The Justice Department’s antitrust chief said Friday that Microsoft Corp.’s competitors are criticizing a proposed settlement in the landmark case because it doesn’t advance their own commercial interests.

Charles A. James, in a speech to the American Bar Assn.’s antitrust section, defended the settlement of the three-year lawsuit from industry critics who say it’s a sellout containing loopholes that allow Microsoft to preserve its dominance of the software industry.

“Some of the loudest and most vocal criticism has come from some of Microsoft’s competitors,” said James, without naming the corporate critics, which include AOL Time Warner Inc., Sun Microsystems Inc. and RealNetworks Inc. “I don’t think we have ever had competitors be quite so aggressive in asking that we serve their interests. Our job as antitrust enforcers is not to level the playing field mid-game.”

James distinguished between the “real Microsoft case” and “Microsoft, the public spectacle.” He said the appeals court’s ruling that Microsoft illegally protected the monopoly its Windows operating system enjoys doesn’t support the “broad-scale emasculation of the company” that rivals sought.

Ken Wasch, president of the Software & Information Industry Assn., said Microsoft’s major rivals are the only ones “big enough” to speak out against the settlement. In an industry where “everyone depends on Microsoft one way or the other,” smaller software companies fearing retribution are reluctant to voice their complaints, he said.

“I don’t know who you’d expect to hear from,” Wasch said in response to James’ comments. “People who are going to speak up are the companies that feel they are entitled to a fair playing field.

“We have yet to find anyone who supports the settlement who is not on the Microsoft payroll.”

Microsoft’s rivals preferred a settlement that would require Microsoft to un-bundle features of the Windows XP operating system and sell the programs separately, James said. Critics also are dissatisfied that Microsoft isn’t required to disclose the source code for the operating system that powers 95% of the world’s personal computers, James said.

“Remedies along those lines would have no basis,” James said.

He said there’s no legal justification for criticism that the settlement doesn’t prevent Microsoft from offering new Internet and e-commerce services or continuing to add features to Windows. Nine of the 18 states that joined in bringing the suit have agreed to sign on to the settlement. Others say they’ll oppose the pact and press ahead with the suit.

Separately, Microsoft said it would pay the legal fees for any of the states that are objecting to the settlement if they agree to drop their opposition.

In a court filing, Microsoft said it would pay the litigation costs, in addition to reasonable attorneys’ fees, said Jim Desler, a Microsoft spokesman. Desler called it a “standard offer.”