“The U.S. Department of Justice (DOJ) and Microsoft
Corp. (NASDAQ:MSFT)
Friday agreed to settle the ongoing antitrust suit that has hounded
the software titan for three years. The settlement imposes an
independent panel to monitor the company’s practices, but requires
few changes to its business model.The DOJ said that the settlement, “imposes a broad range of
restrictions that will stop Microsoft’s unlawful conduct, prevent
recurrence of similar conduct in the future and restore competition
in the software market, achieving prompt, effective and certain
relief for consumers and businesses.”Microsoft Chairman and Chief Software Architect Bill Gates
added, “The settlement is fair and reasonable and, most important,
is in the best interests of consumers and the economy. While this
settlement imposes some very tough rules and restrictions on our
business, we believe that resolving this case now is the right
thing to do for our customers, for the entire technology industry,
and for the economy.” The U.S. Department of Justice (DOJ) and
Microsoft Corp. Friday agreed to settle the ongoing antitrust suit
that has hounded the software titan for three years. The settlement
imposes an independent panel to monitor the company’s practices,
but requires few changes to its business model.”
Press Release: Department Of Justice And Microsoft Corporation
Reach Effective Settlement On Antitrust Lawsuit
WASHINGTON, D.C. — The Department of Justice
reached a settlement today with Microsoft Corporation that imposes
a broad range of restrictions that will stop Microsoft’s unlawful
conduct, prevent recurrence of similar conduct in the future and
restore competition in the software market, achieving prompt,
effective and certain relief for consumers and businesses.
The settlement reached today accomplishes this by:
- creating the opportunity for independent software vendors to
develop products that will be competitive with Microsoft’s
middleware products on a function-by-function basis; - giving computer manufacturers the flexibility to contract with
competing software developers and place their middleware products
on Microsoft’s operating system; - preventing retaliation against computer manufacturers, software
developers, and other industry participants who choose to develop
or use competing middleware products; and - ensuring full compliance with the proposed Final Judgment and
providing for swift resolution of technical disputes.
“A vigorously competitive software industry is vital to our
economy and effective antitrust enforcement is crucial to
preserving competition in this constantly evolving high-tech
arena,” said Attorney General John Ashcroft. “This historic
settlement will bring effective relief to the market and ensure
that consumers will have more choices in meeting their computer
needs.”
The settlement, which will be filed today in U.S. District Court
in the District of Columbia with Judge Colleen Kollar-Kotelly, if
approved by the court, would resolve the lawsuit filed by the
Department on May 18, 1998.
“This settlement will promote innovation, give consumers more
choices, and provide the computer industry as a whole with more
certainty in the marketplace,” said Charles A. James, Assistant
Attorney General for the Antitrust Division. “The goals of the
government were to obtain relief that stops Microsoft from engaging
in unlawful conduct, prevent any recurrence of that conduct in the
future, and restore competition in the software market — we have
achieved those goals.”
Today’s proposed settlement is modeled on the conduct provisions
in the original Final Judgment entered by Judge Jackson, but
includes key additions and modifications that take into account the
current and anticipated changes in the computer industry, including
the launch of Microsoft’s new Windows XP operating system, and the
Court of Appeals decision revising some of the original liability
findings.
The proposed Final Judgment includes the following key
provisions:
Broad Scope of Middleware Products The proposed
Final Judgment applies a broad definition of middleware products
which is wide ranging and will cover all the technologies that have
the potential to be middleware threats to Microsoft’s operating
system monopoly. It includes browser, e-mail clients, media
players, instant messaging software, and future new middleware
developments.
Disclosure of Middleware Interfaces Microsoft
will be required to provide software developers with the interfaces
used by Microsoft’s middleware to interoperate with the operating
system. This will allow developers to create competing products
that will emulate Microsoft’s integrated functions.
Disclosure of Server Protocols The Final
Judgment also ensures that other non-Microsoft server software can
interoperate with Windows on a PC the same way that Microsoft
servers do. This is important because it ensures that Microsoft
cannot use its PC operating system monopoly to restrict competition
among servers. Server support applications, like middleware, could
threaten Microsoft’s monopoly.
Freedom to Install Middleware
Software–Computer manufacturers and consumers will be
free to substitute competing middleware software on Microsoft’s
operating system.
Ban on Retaliation–Microsoft will be
prohibited from retaliating against computer manufacturers or
software developers for supporting or developing certain competing
software. This provision will ensure that computer manufacturers
and software developers are able to take full advantage of the
options granted to them under the proposed Final Judgment without
fear of reprisal.
Uniform Licensing Terms Microsoft will be
required to license its operating system to key computer
manufacturers on uniform terms for five years. This will further
strengthen the ban on retaliation.
Ban on Exclusive Agreements Microsoft will be
prohibited from entering into agreements requiring the exclusive
support or development of certain Microsoft software. This will
allow software developers and computer manufacturers to contract
with Microsoft and still support and develop rival middleware
products.
The proposed Final Judgment also includes key additional
provisions related to enforcement:
Licensing of Intellectual Property Microsoft
also will be required to license any intellectual property to
computer manufacturers and software developers necessary for them
to exercise their rights under the proposed Final Judgment,
including for example, using the middleware protocols disclosed by
Microsoft to interoperate with the operating system. This
enforcement measure will ensure that intellectual property rights
do not interfere with the rights and obligations under the proposed
Final Judgment.
On-Site Enforcement Monitors The proposed
settlement also adds an important enforcement provision that
provides for a panel of three independent, on-site, full-time
computer experts to assist in enforcing the proposed Final
Judgment. These experts will have full access to all of Microsoft’s
books, records, systems, and personnel, including source code, and
will help resolve disputes about Microsoft’s compliance with the
disclosure provisions in the Final Judgment.
The core allegation in the lawsuit, upheld by the Court of
Appeals in June 2001, was that Microsoft had unlawfully maintained
its monopoly in computer-based operating systems by excluding
competing software products known as middleware that posed a
nascent threat to the Windows operating system.
Specifically, the Court of Appeals found that Microsoft engaged
in unlawful exclusionary conduct by using contractual provisions to
prohibit computer manufacturers from supporting competing
middleware products on Microsoft’s operating system; prohibiting
consumers and computer manufacturers from removing Microsoft’s
middleware products from the operating system; and reaching
agreements with software developers and third parties to exclude or
disadvantage competing middleware products.
The proposed Final Judgment will be published by the Federal
Register, along with the Department’s Competitive Impact Statement,
as required by the Antitrust Procedures and Penalties Act. Any
person may submit written comments concerning the proposed consent
decree within 60 days of its publication to: Renata Hesse, Trial
Attorney, 325 7th Street, N.W., Suite 500, Washington, D.C. 20530,
(202-616-0944). At the conclusion of the 60-day comment period, the
Court may enter the proposed consent decree upon a finding that it
serves the public interest.
The proposed Final Judgment will be in effect for a five year
period and may be extended for an additional two-year period if the
Court finds that Microsoft has engaged in multiple violations of
the proposed Final Judgment.