Microsoft Corp's new Windows XP operating system may be the next target for antitrust enforcers seeking to make the company change the way it does business.
Regulators are scrutinizing the product, due for release on Oct. 25, to prevent the biggest software maker from extending its monopoly. They may also try to limit Microsoft's plan to develop Web services linking PCs, Web sites and other devices, experts said.
An appeals court yesterday overturned a judge's order that Microsoft be broken up, though it upheld a finding that the company illegally defended its Windows monopoly. Windows XP won't include Internet software from rival AOL Time Warner Inc, though it will have Microsoft's Internet software and other programs that target competitors' business.
"It looks very much like more of the same in the misuse of monopoly and particularly the kind of tying or bundling this court now has found to be a very viable claim in this case," said Connecticut Attorney General Richard Blumenthal, one of several state attorneys general who joined federal authorities in their fight against Microsoft.
Yesterday's ruling in the three-year legal battle gives "some ammunition" to rivals seeking to sue Microsoft or to delay Windows XP's release, said Ernest Gellhorn, a George Mason University law professor who specializes in antitrust issues.
The government or competitors could petition the court for a delay, though the request probably wouldn't be granted, according to Ron Katz, head of litigation at Coudert Brothers. A request alone, though, may cause Microsoft shares to fall because the software maker has said it expects XP to boost sales, investors said.
A delay also would reverberate through the PC industry.
Chipmaker Intel Corp and PC makers, including Compaq Computer Corp and Hewlett-Packard Co have said they're looking to Windows XP to help pull them out of a sales slump.
Officials at AOL and RealNetworks Inc, another Microsoft foe that makes software for sending audio and video over the Internet, declined to say if they planned to seek an injunction.
Regulators have also been quiet when asked if they would try to prevent Microsoft from releasing Windows on Oct. 25.
Bundling Internet Explorer with earlier versions of Windows formed the core of the antitrust case. In addition to Internet Explorer, Windows XP will have software to access MSN, the second-biggest Internet service provider after AOL. It will have media-player software that competes with RealNetworks and new programs that let users make video ``telephone calls'' and order digital photos over the Web, a bid to compete with AOL.
Microsoft said it understands the ruling to mean that it can add new technologies to products like Windows XP.
"We think that the framework outlined by the appeals court lets us innovate in our products," spokesman Jim Cullinan said.
Yesterday's ruling left intact the core of the case against Microsoft by declaring that it illegally defended its monopoly, putting regulators in a strong position to force an overhaul of the company's business practices, experts said. State attorneys general such as Blumenthal have signaled they also may seek changes to Windows XP.
"Microsoft is not going to get a `get out of jail free card,'" said Bill Whyman, president of the Precursor Group, a Washington-based investment research firm. "Either by settlement or by remedy of the court they are going to get stuck with a set of conduct restraints."
RSS