Microsoft announced Monday that it had reached a US$536-million antitrust settlement with Novell and an agreement with a computer industry trade association that has long fought Microsoft on antitrust issues in the US and Europe.
Microsoft, the world's largest software company, hailed the agreements as the culmination of its 18-month, multi-billion dollar campaign to settle antitrust conflicts with its major antagonists in the industry, including Time Warner and Sun Microsystems.
These settlements suggest that the US government and most of the computer industry have now moved beyond their decade-long pursuit of the company for antitrust violations. And that development, the company argues, should cause regulators in Europe, where Microsoft still faces a significant challenge, to rethink their approach.
"There is clearly less need for the European Commission to persist with litigation on behalf of competition when virtually all of the competitors are saying their issues have been resolved to their satisfaction," said Brad Smith, Microsoft's general counsel.
Microsoft, Smith added, has shown it can settle competitive issues in cooperation with others in the industry.
"This sends a strong message that we and other companies in our industry do have the capacity now to sit down face-top-face and resolve the thorny antitrust issues that in the past were left instead to government to resolve," he said. "We think that's important in Europe as well as in the United States and elsewhere."
Such sentiments, said Andrew Gavil, a professor of law at Howard University, reflect just how far Microsoft appears to think the pendulum of antitrust policy has swung in its direction.
"That's a very old argument that dates back to Rockefeller -- just let us cooperate and we'll work things out for ourselves," Gavil said. "What does that really mean? Less competition."
The European Commission last March issued a harsh ruling against Microsoft in finding that it violated antitrust law and stifled competition. The commission ordered the company to divulge more technical information to competitors and to offer a version of its Windows operating system without its Media Player, the software for playing digital music or movies. The commission also fined the company 497 million euros (US$641 million).
Microsoft has appealed and filed for a stay of the order pending the appeal process, which could take a few years. The company contends the technical disclosure requirement amounts to confiscation of Microsoft's intellectual property and a forced removal of the Media Player from Windows would deny the company the freedom to improve its products, and thus ultimately harm consumers.
The European appeals court, the Court of First Instance in Luxembourg, is expected to rule on Microsoft's motion for a stay before the end of the year. The appeals court decision should signal the court's view of the legal validity of the commission ruling.
Microsoft executives say the agreements with Novell, a software company based in Waltham, Massachusetts, and the Computer and Communications Industry Association, a trade group in Washington, undermine the European case. In settling with the industry association, the company agreed to become a member of the trade group.
The trade group and four companies -- Time Warner, Sun Microsystems, Novell and RealNetworks -- brought the complaints that prompted the European case. Others came forward, but those five were the most forceful, persistent advocates, according to Microsoft.