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Sat, Nov 24, 2001 - Page 19 News List

Microsoft antitrust case critics suspect shady dealings

Half of the states involved in the legal action over the company's monopolistic tendencies have rejected the settlement, necessitating another court battle

DPA , WASHINGTON

Members of the media surround Bill Gates, chairman and chief software architect of Microsoft Corp, in Times Square, New York in October. Gates is holding the box for the new Windows XP operating system launched recently.

PHOTO:BLOOMBERG NEWS

For a few days it seemed that one of the largest anti-monopoly cases in the world was going to draw quietly and unspectacularly to its conclusion.

In the middle of a battle over purported monopolistic machinations by Microsoft, the US Justice Department agreed to an out-of-court settlement that, in the eyes of independent observers, lets the company off rather lightly.

But nine of the 18 states involved in the proceedings refused to endorse the proposed settlement, and their refusal will necessitate a new round in the years-old judicial process. Judge Colleen Kollar-Kotelly intends to discuss her reservations about prolonging the settlement at the beginning of next year.

Microsoft then came up with an offer to pay the litigation costs of the nine states if they would sign by the middle of next week. But some, such as Iowa Governor Tom Miller, have already said they will do no such thing.

The US Justice Department now finds itself in a tough position, facing harsh criticism. The Department's lawyers appear to some to have been outmaneuvered by Microsoft, and the complicated technical details of the agreement seem to give the software maker enormous freedom to continue their prior patterns of behavior.

And the State Attorneys General and Microsoft's competitors aren't the only ones making such observations. Many independent observers concur.

"This settlement amounts to the government taking a dive," says Timothy Bresnahan, the chief economist of the Antitrust Division of the Clinton administration.

US President George W. Bush's choice for leader of the Antitrust Division, Charles James, denies having made the deal without consulting with his own department's lawyers. Many of them had spent years pursuing this case. "Reports that I made a back room deal with Microsoft are patently false," he claims.

Most observers agree, however, that without a change of government in Washington, the settlement would never have come about. During his campaign for the presidency, Bush made no secret of his intention to keep the country out of Microsoft's competitive battleground.

For his part, James had proclaimed his intention to follow the case as diligently as possible. Nevertheless, the Department of Justice recently announced that it was dropping its long-standing attempts to split the company.

The poor state of the US economy and an aggressive lobbying campaign by Microsoft may have been the triggers that encouraged the US Justice Department to put the case to rest. Without the ballast of a legal proceeding weighing it down, industry leader Microsoft may be able to pull the troubled computer field out of its crisis.

The individual states are still rallying behind the flag of the consumer, however. To be sure, some of this activism has been spurred by Microsoft's competitors located in these states, who pay taxes and contribute to local politicians' political campaigns.

"Not only is the settlement just full of loopholes, but it also allows Microsoft to dictate its own fate," says Tom Reilly, the Attorney General of Massachusetts. "We intend to continue the trial," reports Reilly's Connecticut colleague, Richard Blumenthal.

"I am confident that once the judge sees the flaws and gaps in this current settlement, she will elect to impose her own changes in order to strengthen it," says California's Attorney General Bill Lockyer. This sort of ending would be fuel for the fires of the Justice Department's critics, who do not buy the argument that Microsoft is not in need of strict regulation.

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