Sun, Nov 03, 2002 page1

• Microsoft claims final victory in its long antitrust suit

  • AP
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  A federal judge has handed Microsoft Corp. an enormous victory by endorsing nearly all of its antitrust settlement with the Justice Department and rejecting harsher penalties sought by nine states.

  US District Judge Colleen Kollar-Kotelly warned company founder Bill Gates and other Microsoft executives, however, that she would hold them individually responsible for complying with her instructions.

  The nine dissenting states, joined by the District of Columbia, had argued that tougher sanctions were needed to restore competition in the computer industry. But the judge said penalties they sought would chiefly benefit the company's rivals.

  Kollar-Kotelly made a few minor changes to the settlement that require acceptance by Microsoft and the Justice Department, which sued the software giant four and a half years ago when Democrats held the White House and economic times were rosier.

  Appeals by the dissenting states were considered likely. State officials said they were studying their options.

  "We've got plenty of fight," Iowa Attorney General Tom Miller said. "We haven't lost it at all. We need to talk to our colleagues, analyze it more and make a decision."

  The original trial judge in the case ordered the world's largest software company split in two, touching off two years of wrangling. Friday's result was far more favorable to Microsoft.

  Gates said he was "personally committed" to abide by the agreement, which he called "a good compromise and good settlement." He said Microsoft was unlikely to challenge the decision.

  "This settlement puts new responsibilities on Microsoft, and we accept them," Gates said, adding: "At this point, we're not seeing anything that would be cause for appeal, but we need to make a full assessment."

  Attorney General John Ashcroft called the decision "a major victory for consumers and businesses."

  Although the decision gives consumers more choices, Microsoft's competitors consider those choices meager.

  Sun Microsystems Inc., one of Microsoft's harshest critics, said the states should appeal.

  AOL Time Warner general counsel Paul T. Cappuccio said the ruling made "a weak settlement stronger." He said Netscape, AOL Time Warner's Web browser subsidiary, would challenge Microsoft in a pending lawsuit "designed to promote competition and deter further anticompetitive behavior."

  One executive whose company's Web browser competes with Microsoft's dominant Internet Explorer said the ruling seals a toothless settlement.

  "There were no real remedies, no actual punishment. I'm not too surprised," said Jon F. Von Tetzchner of Opera Software.

  The ruling allows Microsoft rivals more flexibility to offer competing software features on computers running Windows.

  Microsoft has already enacted terms of the settlement, and now allows users of its latest Windows versions to replace some built-in features, such as instant-messaging or music players, with those from competitors.

  While rejecting the states' arguments, the judge acknowledged that Microsoft has a "frustrating" tendency not to admit to its illegal corporate conduct.

  "Let it not be said of Microsoft that `a prince never lacks legitimate reasons to break his promise,' for the court will exercise its full panoply of powers to ensure that the letter and spirit of the remedial decree is carried out," the judge wrote, quoting philosopher Niccolo Machiavelli.

  Microsoft and the government had argued that the settlement they secretly crafted one year ago was sufficient. The agreement, which would last at least five years:

  -- Prevents Microsoft from participating in exclusive deals that could hurt competitors;

  -- Requires uniform contract terms for the manufacturers of computers;

  -- Allows manufacturers and customers to remove icons for some Microsoft features;

  -- Requires Microsoft to release some technical information so software developers can write programs for Windows that work as well as Microsoft's own products do.

  Investors expected a far worse result for Microsoft, driving prices down in the hours before the judge disclosed her decisions. The stock rose slightly, closing at US$53, down US$0.47. It rose US$3.33, or 6 percent, in after-hours trading.

  Microsoft's US$287.6 billion market value exceeds the gross domestic product of at least 150 nations.
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