Microsoft Antitrust Accord Upheld
A U.S. appeals court Wednesday upheld the government’s antitrust settlement with Microsoft Corp. and rejected appeals for tougher remedies, handing a major victory to the world’s largest software maker.
The U.S. Court of Appeals for the District of Columbia turned down appeals from the state of Massachusetts and two high-tech industry groups that could have led to a redesign of the company’s Windows operating system. The appeals court said a lower court did the right thing when it affirmed the Justice Department’s 2001 settlement.
The settlement, approved by District Judge Colleen Kollar-Kotelly, gives computer makers like Hewlett-Packard Co. greater freedom to feature rival software on their machines by allowing them to hide some Microsoft icons on the Windows desktop. Microsoft also must license key computer code that competitors need to make their server software work well with Windows. Massachusetts and two technology industry trade groups had argued the court should force Microsoft to redesign Windows and stop tying Internet Explorer and other products directly into the operating system, a practice known as “commingling.”
But the appeals court said the district court struck the right balance by trying to minimize the harmful effects of commingling rather than banning it.
Consumers could find that many programs would not work well with Windows if outsiders were allowed to modify the operating system, the court said.
“Letting a thousand flowers bloom is usually a good idea, but here the court found evidence ... that such drastic fragmentation would likely harm consumers,” Chief Judge Douglas Ginsburg wrote.
The same appeals court ruled in 2001 that Microsoft had illegally maintained its Windows operating system monopoly, but it rejected another lower court judge’s proposal to break the company in two.
A Microsoft official said the ruling provided more legal certainty for the company and the industry as a whole.
“We’re pleased that it takes another significant step forward in adding legal clarity and putting the issues of the past behind us,” Microsoft general counsel Brad Smith said.
Microsoft has settled class-action suits in 12 states and the District of Columbia over the last two years, for a total of more than $1.5 billion.
The Justice Department said the ruling proved that the settlement protects against anti-competitive conduct, while Massachusetts Atty. Gen. Tom Reilly said the opinion showed antitrust laws were not working.
“Our high-tech economy will not reach its full potential unless regulators and the courts are willing to deal with Microsoft and its predatory practices,” he said.
“We’re disappointed, obviously,” said Ed Black, president and chief executive of the Computer and Communications Industry Assn., one of the two trade groups that had challenged the deal. “The settlement remains a failure and it has not served the public interest.”
Microsoft stock closed up 6 cents at $28.56 on Nasdaq after the news was announced.
