Analysis: Case Closed? Far From It
- By Scott Bekker
- November 05, 2002
Yes, U.S. District Judge Colleen Kollar-Kotelly's opinion on Friday to uphold most parts of the antitrust settlement and alter others only slightly looks like a clincher for the case. It represents a huge turnaround for Microsoft, on paper anyway, from the situation in mid-2000 when the company faced a possible break up by the courts.
Microsoft gets to continue to compete with nearly the same aggressiveness it always has, and the judge's opinion sidestepped the central issue of tying software.
But when it comes to the courts, it ain't over 'til the … no wait, it's never over. The sad fact is that by the time situations like this get dragged into the courts, nobody ever really wins. The ensuing years tend to be a long-drawn out process of derivative actions, endless court dates and uncertainty.
Let's take a look at Microsoft's court docket from here on out. It's full.European Commission. The European Commission contends that Microsoft is using its monopoly position in desktop software to unfairly gain market share for its server products. This is a huge issue for Microsoft because European Union regulators have authority to impose fines up to 10 percent of global sales. A preliminary decision in that case is expected before the end of the year. Meanwhile, the European Commission is opening investigations into antitrust allegations surrounding Windows XP.
The non-settling states. In the areas of Judge Kollar-Kotelly's opinion where she didn't summarily dismiss the non-settling states complaints, she practically ridiculed them. The states were pushing for a new legal standard recognizing that in high-tech, where seemingly small innovations can bring about disruptive changes, that fledgling companies introducing such innovations require government protection from monopolists. They didn't get that. They were reduced to claiming victories for getting an area of the settlement slightly expanded to cover servers and allowing computer makers to configure software packages so non-Microsoft applications could launch automatically when Windows starts up. Despite massive legal bills for their unsuccessful efforts, the state's haven't thrown in the towel. Iowa attorney general Tom Miller says it's too early to say whether the states will appeal. California attorney general Bill Lockyer holds out the option of filing a new lawsuit to get the non-settling states' issues considered since the judge ruled that the current antitrust case was too narrow for the states' laundry list of new complaints.
Private and class-action lawsuits. Microsoft faces lawsuits from Sun Microsystems and AOL time Warner that rest on the findings of fact and law entered into the legal record by U.S. District Judge Thomas Penfield Jackson. Before being booted from the case by the appeals court, Jackson established that Microsoft had maintained an illegal monopoly, and the appeals court upheld that and his myriad other findings. Microsoft faces the potential of billions of dollars in damages through those high-profile lawsuits, lawsuits filed by two smaller private companies and two class-action lawsuits filed on behalf of consumers. Of course, Microsoft has $40 billion in cash and rising profit margins to pay out the damages.
Court oversight. The antitrust settlement lasts for five years. Judge Kollar-Kotelly retained the option to extend court oversight for two years beyond that if necessary. Remarkably, this oversight has already kicked in. The Wall Street Journal reported on Monday that Sun Microsystems has already complained about secret agreements Microsoft is asking competitors to sign if they want access to the interfaces for interacting with Windows desktop software. Microsoft is required to disclose that information under the settlement. Sun is the only company to sign the deal so far, and the company filed a complaint with the U.S. Justice Department that the royalties are too high and the terms are too restrictive. U.S. officials interviewed Sun executives for nearly three hours about the issue on Friday, the Journal reported.
Let's face it. This case will never be "settled" to anyone's satisfaction. Need a precedent? The first Microsoft antitrust case that started in 1994 ended in a settlement. By 1997, the government alleged Microsoft violated the terms. The government ultimately lost, but no matter. A new, more massive lawsuit -- the one that's just been settled -- took its place. This latest settlement is another chapter in a story that has no end.
Scott Bekker is editor in chief of Redmond Channel Partner magazine.