News

Update: Court agrees with most parts of Microsoft settlement

• By Jack Vaughan
• November 1, 2002

[Updated November 2, 2002] -- A U.S. District Court ruled on Friday largely in favor of Microsoft in its long-running antitrust case.

Judge Colleen Kollar-Kotelly agreed with most parts of a settlement reached between Microsoft, the U.S. Dept. of Justice and several of the state attorneys general in the wake of an appellate ruling upholding the view that Microsoft had illegally maintained a monopoly based on its Windows desktop operating system.

Nine state attorneys general had refused to go along with the settlement reached by Microsoft and the DOJ, leading to a series of hearings this year in U.S. District court. Hearings centered on further alternative remedies to Microsoft’s behavior. At earlier stages of the trial, a breakup of the Redmond, Wash.-based software giant was being contemplated.

State attorneys general first teamed with the government to challenge Microsoft’s business practices during the Clinton administration in 1998.

In an Executive Summary explaining her ruling, Judge Kollar-Kotelly concluded that some remedies the plaintiff states sought to impose were in areas unrelated to the market at the heart of Microsoft’s monopoly. As well, she wrote: “The Plaintiff’s proposed definition of middleware is inconsonant with the treatment of the term [middleware] during the liability phase of this case.” Middleware falls outside of the market relevant to Microsoft’s monopoly, she indicated.

Several of the proposed remedial provisions would require severe alterations to Microsoft’s product. Kollar-Kotelly noted that “certain of Microsoft’s competitors appear to be those who most desire these provisions ... and are likely beneficiaries of these provisions, while other competitors in the relevant market would not necessarily benefit.” During the course of the hearings, major industry players freely advised plaintiff attorneys general on aspects of the case.

Ahead of this ruling, Microsoft had begun to implement parts of the settlement it reached with the DOJ. “This latest ruling affirms the settlement,” said Bill Gates, Microsoft founder, chairman and chief software architect, at a press conference.

“It’s a settlement that imposes some tough responsibilities on Microsoft,” said Gates. “It gives us clarity to move forward,” he said, adding that the company was still reviewing the day’s extensive ruling.

Meanwhile, Michael Morris, special counsel to competitor Sun Microsystems, said in a statement that “the weak steps Microsoft has taken to comply with the requirements already show that settlement will be ineffective in curbing Microsoft’s monopolistic and anti-competitive practices.” He also pointed to ongoing European Commission investigations of Microsoft business practices.

In March, Sun filed a multimillion dollar antitrust lawsuit against Microsoft seeking remedies for “the harm inflicted by Microsoft's anticompetitive behavior” with respect to the Java middleware platform.

In her statement, Judge Kollar-Kotelly warned that she would view harshly any attempt by Microsoft to skirt settlements already reached.