Judge Is Expected to Toughen Microsoft Antitrust Settlement
A federal judge will rule today on whether to approve, reject or modify Microsoft Corp.’s landmark antitrust settlement with the Justice Department, a turning point for the most important monopoly case in a generation.
U.S. District Judge Colleen Kollar-Kotelly in Washington will make her ruling after the U.S. stock markets close, probably in both the federal government’s lawsuit and in the parallel case brought by California, Iowa and seven other states that believe the proposed federal settlement is weak.
Many legal experts predicted Thursday that Kollar-Kotelly would try to incorporate some of the states’ requested remedies in the federal deal, making the year-old settlement at least a little tougher on the world’s most valuable company.
They cited the long time that Kollar-Kotelly has been working on the ruling and her request at the trial’s end that the states rank their proposals by importance.
“If all she was going to do was rubber-stamp the [federal] Tunney Act settlement, she wouldn’t have taken five months,” said Robert H. Lande, a law professor at the University of Baltimore. “She’s trying to work out a better remedy.”
If the judge applies only modest changes -- or none at all -- to the settlement, the 4-year-old case might come to an end. If she comes down hard on Microsoft, the company is certain to appeal.
Microsoft declined to comment Thursday. In an earlier interview, Microsoft General Counsel Brad Smith promised an appeal if the company has to give up much of its proprietary software, split the Windows operating system into pieces, or if the details of the ruling are unworkable.
“It’s basically simple economics that says it doesn’t make sense to spend hundreds of millions of dollars to develop software if you have to give away the results,” Smith said.
Microsoft, the Justice Department and the nine states reached their agreement ahead of a trial to determine how Microsoft should be punished for illegally using its Windows monopoly to crush threats from Netscape Communications Corp.’s Web browser and Sun Microsystems Inc.’s Java programming language, and how the company should be restrained from abusing its power in the future.
Earlier, a federal appeals court threw out a proposed breakup of Microsoft while affirming it broke the law.
Microsoft already has implemented some aspects of the proposed settlement. It disclosed more information about how Windows interacts with other Microsoft programs so that competing software makers can improve their products. Microsoft also changed its pricing policy, setting uniform licensing fees for the 20 biggest computer firms and promised not to retaliate if they use non-Microsoft functions on Windows-based computers.
Gateway Inc., Hewlett-Packard Co. and Dell Computer Corp. have since begun including the WordPerfect word-processing program made by Corel Corp. instead of Microsoft’s Word on some less-expensive machines.
But the effect on Microsoft has been slight. Microsoft reaped record revenue of $7.75 billion in the third quarter and more than doubled its profit.
The dissenting states want to go further in many areas, forcing Microsoft to disclose more internal mechanisms and do so earlier in the manufacturing process, which they told Kollar-Kotelly was their top priority.
They also want to force Microsoft to offer a less-expensive, stripped-down version of Windows that computer makers could modify; to release the code for Internet Explorer, denying Microsoft the fruits of its harm to Netscape, since purchased by AOL Time Warner Inc.; and to license versions of its Office software for use on other operating systems such as Linux.
Microsoft also faces lawsuits by shareholders, AOL and Sun and an antitrust inquiry by the European Union, which is expected to issue a preliminary ruling soon.
