While finding that the integration of Internet Explorer into Windows 98 was part of Microsoft's illegal defense of monopoly, the court ordered more proceedings on US District Judge Thomas Penfield Jackson's findings that the company illegally tied the sale of the browser to the operating system.
The appeals court said the case should be reassigned to a different federal judge. The appeals court said the new judge should balance the benefits to consumers from the integration against the harm inflicted by depriving buyers the choice of different browsers.
Gates hailed that ruling, saying it "set a standard we consider very pro-innovation. Allowing all software companies to be able to add new capabilities to their products" was a major part of the case, the Microsoft chairman said.
The Justice Department under new antitrust chief Charles A. James won't try to resurrect the tying claim because "the most likely scenario is serious settlement talks," Gavil said.
"This government really doesn't want to go back into the district court and have to take public positions on breakup and tying," Gavil said. "Tying is anathema to conservative antitrust theorists."
Still, the government would face political pressure from the states if the Justice Department "agrees to let Microsoft settle for a mere slap on the wrist," said Robert Lande, a University of Baltimore law professor.
Microsoft's supporters said the software giant faces continued legal difficulties, even though the company said the decision "drastically narrows the case and removes the breakup cloud."
"Microsoft itself could still have some headaches in terms of private lawsuits," said C. Boyden Gray, a former White House counsel who represents trade groups that support the company.
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