Microsoft, DOJ Defend Settlement as Hearings Open

Lawyers representing the US Department of Justice (DOJ) and Microsoft appeared before Judge Colleen Kollar-Kotelly Wednesday, and asked her to approve their proposed settlement of Microsoft's four year-old antitrust case. A DOJ lawyer told the judge that the proposed settlement was probably stricter than any ruling a court might have made against the company had the case dragged on any longer. Attorney Philip Beck, who represented the government at the hearing, noted that the Appellate Court's narrowing of the case made it difficult for the DOJ to seek stronger penalties than those in the proposed settlement.

"\[Fighting for stronger remedies in court\] would have been an uphill battle that likely would have been resolved against us," Beck told Kollar-Kotelly. "\[Given the limitations,\] we believe we have negotiated an excellent decree."

Beck also noted other problems with the government's case, in sharp contrast to the DOJ's public stance during the preceding three years, in which its case was described as "rock solid" and "a slam dunk." Beck said that the DOJ would have had problems defining middleware, for example, a term that describes OS support applications and services, such as Web servers, Web browsers, and digital media technology. Beck even suggested that the DOJ would have been hard pressed to prove that Microsoft maintained its monopoly illegally, a bizarre admission given that this very fact was already decided by the courts, and upheld on appeal.

On a more general level, watching the DOJ downplay its case and stand side-by-side with the software giant it once vilified is disturbing on a number of levels. To the company's most vocal critics, Microsoft is a cancer that has run roughshod over the industry for over a decade, and the government's sudden capitulation after over three years of fighting seems more the result of backroom deals than a desire to serve the needs of the public. Indeed, the American Antitrust Institute, which is comprised of antitrust lawyers, believes that Microsoft's secret congressional lobbying efforts had more to do with the settlement than any discussions held between the company and the DOJ.

Legal experts examining the precedent-setting case also raised some interesting issues this week. Some have noted that no major PC makers, all of which are important Microsoft partners, have stood up in support of the settlement. Instead, several PC makers, including Sony and Gateway, have taken the bold step of publicly criticizing the deal. A Gateway representative will even testify against the settlement in court next week at the non-settling states' remedy hearings. Dell, the world's largest PC maker, refuses to comment about the settlement. A Microsoft spokesperson noted that the settlement was beneficial to the PC industry, but couldn't supply the name of a single PC maker that supports the deal. "The consent decree offers great opportunities for developers and clearly also is in consumers' interest," the spokesperson said. "This is a settlement that allows Microsoft to innovate, which is essential for the industry."

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