Microsoft Practices Fall Short, U.S. Says

Changes in Microsoft Corp.’s business practices are failing to meet an antitrust settlement’s goals of promoting serious competition in some types of software, the Justice Department and 16 states said in a federal court filing Friday.

In a status report to the Washington court that approved the landmark settlement, the antitrust enforcers said few strong competitors had taken advantage of a required Microsoft program to license some of its technology to all comers.

The technology in question allows personal computers running Microsoft’s dominant Windows operating system to communicate with central server computers that also use Microsoft programs.

Regulators had hoped that other companies would take advantage of the program to learn how the machines talk to each other. Then they could use that information to make rival server software that would link up just as easily with Windows PCs.

Yet so far, only 11 companies have agreed to pay for the use of Microsoft’s communication technology, Friday’s filing said. Other companies complain that the licenses are too complicated, too expensive or too narrow to be of great use, according to the document.

The Justice Department and the states “are concerned that the current licensing program has thus far fallen short of satisfying fully the goals” of this part of the settlement, the government lawyers wrote.

Among the companies that have signed licensing agreements, several are longtime Microsoft partners that historically haven’t challenged the Redmond, Wash.-based software giant, said Tom Dresslar, a spokesman for California Atty. Gen. Bill Lockyer, who backed the settlement.

“There have been no competing products introduced,” Dresslar said.

A further problem is that most of the companies that have signed license agreements are working with individual applications such as software for streaming movies and music from a server to PCs.

The state and federal authorities said they had asked Microsoft to make changes, including shortening the 50-page licensing deals and making the royalty terms easier to understand.

“We will be making a number of changes that further simplify the program and address the government’s concerns,” Microsoft spokeswoman Stacy Drake said Friday. “We are very committed to making the program a success.”

The government legal team said it wasn’t confident that the changes would be enough. If they aren’t, the lawyers could ask U.S. District Judge Colleen Kollar-Kotelly to reinterpret or even modify the settlement.

In a separate filing Friday, the state of Massachusetts said it was investigating allegations that Microsoft was trying to stifle competition from unnamed Internet search engines.

The three-page filing also said the state was “reviewing reports that a similar campaign is planned against document software such as Adobe Acrobat,” made by Adobe Systems Inc. The state said Microsoft’s efforts, if confirmed, would be “serious and troubling.” But it said the consent decree might not bar such actions.

Spokesmen for Adobe and for the top Internet search engine, Google Inc., didn’t return calls seeking comment.

Drake said that she didn’t know whether Microsoft had been notified of the new allegations and that she had little additional information.

“Given the vague and unsubstantiated nature of these allegations, it is difficult to respond,” Drake said.

Microsoft shares, which rose 27 cents to $27.81 in regular Nasdaq trading Friday, dipped to $27.66 in extended trading after the court filings were released.