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May 20, 2002—In this issue:
1. NEWS AND VIEWS
- Microsoft Remedy Trial: Judge Warns Microsoft That It Must Comply
- Cast Your Vote for our Readers' Choice Awards!
3. CONTACT US
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1. NEWS AND VIEWS
(contributed by Paul Thurrott, [email protected])
Judge Colleen Kollar-Kotelly warned Microsoft Friday that it must comply with any rulings she imposes as punishment for the company's antitrust violations. Her rebuke came on the final day of hearings to determine whether the judge will consider any of the strong remedies that nine nonsettling states and the District of Columbia recommended.
"I hear that Microsoft will make every effort to comply \[with my ruling\]," Kollar-Kotelly told Microsoft attorneys Friday. "I would expect that is going to be the case. These are the kinds of things that will come back to haunt you because I will have a memory of all these statements."
Microsoft executives and lawyers have said repeatedly that the company will comply with whatever remedial decree the judge issues. But the judge's comments were no doubt inspired by Microsoft's violation of its 1995 consent decree with the federal government in which the company agreed not to bundle applications with Windows. The company then integrated Internet Explorer (IE) with Windows 95, an act that Microsoft completed to illegally thwart competition from Netscape (according to later testimony). This violation eventually led to a federal lawsuit and a sweeping guilty verdict in the company's historic antitrust trial.
States' attorney John Shenefield agreed that Kollar-Kotelly should watch the company carefully because she will have a problem "forcing Microsoft to abide by a judgment it hates," he said. "If you have monopoly power, and you're making a lot of money doing what you're doing, there's very little incentive to change the way you live. Hope springs eternal, but you're dealing with a monopolist."
Microsoft attorney Charles Rule said those remarks "offended" him and told the judge several times that the company will fully comply with her ruling. "It is extremely inappropriate to assume that Microsoft is not going to respect the order of this court," he said. "There is no basis for that in this record or outside in the world. My belief is that Microsoft will do everything it can to adhere to \[Kollar-Kotelly's decision\]. It is very sincere about that."
The memory-challenged Rule might not remember that Microsoft has a tradition of side-stepping consent decrees, judicial decisions, and other legal agreements. The company technically complies with its agreements but violates their spirit and intent. Here are three examples of Microsoft's past behavior.
- As I noted earlier, in Microsoft's 1995 consent decree the company agreed not to bundle applications in Windows. But 2 years later, when the Department of Justice (DOJ) sued Microsoft because the company had bundled IE with Windows, Microsoft said that the two products weren't bundled—they were integrated. "The facts will show that we are in full compliance with the consent decree," Microsoft spokesperson Mike Murray said in October 1997. "The consent decree specifically says that we are able to integrate new features into the \[OS\]."
- In December 1997, after Judge Thomas Penfield Jackson forced Microsoft to offer PC makers a Windows 95 version that didn't include IE, the company shipped a broken Windows version that didn't boot or run, a bizarre and stubborn decision the company apparently designed to show how integrated the two products were. These actions didn't fool anyone: The DOJ described them as "an absolute mockery of \[Jackson's\] preliminary injunction;" Jackson was enraged.
- In late November 2001, Microsoft signed a proposed settlement with the federal government in which it promised to ease Windows licensing terms for its PC-maker partners so that they could add third-party products and make other changes. However, within weeks, several of the largest PC makers complained that Microsoft used the agreement to subvert the PC makers' patents, raise prices, and extend Microsoft's dominance. Dell, Gateway, and Sony were among the companies that complained about the new licenses. "Dell cannot imagine that the intent of the \[DOJ settlement\] decree was an even greater degree of control by Microsoft," an email message from a Dell executive said.
During Friday's hearing Judge Kollar-Kotelly also cast doubts that she will adopt the nonsettling states' plan to enforce the Microsoft remedies. In its proposed settlement with the federal government, Microsoft recommended a three-person compliance team (housed at the company's corporate headquarters) that would report to the DOJ and field complaints. But the states want Kollar-Kotelly to appoint a special master who would report directly to the judge. Kollar-Kotelly called the request "odd" and implied that she isn't open to the idea. "Obviously I have some concerns about \[this plan\], as to how it would work," she said. She also noted that the DOJ should handle antitrust enforcement rather than "abdicate" it to a special master.
The two sides will meet again on June 19 to unveil their final arguments. Then the judge will prepare her ruling, which she will probably deliver in July.
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