November 1, 2002 6:52 PM PST

The Microsoft case: Is it over?

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Judge: Case closed

November 4, 2002
WASHINGTON--Microsoft's five-year antitrust case may have reached its anticlimactic end.

Unless one side or another decides to appeal, a decision by U.S. District Judge Colleen Kollar-Kotelly on Friday could mark the final chapter in a case once said to be a definitive one for antitrust law in the 21st century.

Neither Microsoft, the U.S. Justice Department, nor the group of states that signed on to what is now an official settlement has a strong incentive to continue the case. For his part, U.S. Attorney General John Ashcroft called Friday's decision a "major victory for consumers."

Microsoft general counsel Brad Smith suggested the company was content with the judge's decision. "There's nothing that we've read so far that leads us to believe we're likely to file an appeal," Smith said in an interview.

That leaves the states that have refused to settle. Those are California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah and West Virginia, along with the District of Columbia.

In a conference call with reporters, attorneys general for the nonsettling states wouldn't say what they would do next. But in what may hint at the course of action the states are contemplating, California attorney general Bill Lockyer said, "We're all, on both sides of this fight, fatigued."

If the nonsettling states do choose to appeal, legal experts predict they'll have a difficult time, especially because Kollar-Kotelly spent 32 days this spring on hearings to decide a remedy that would be appropriate.

Another reason for the states to forgo an appeal is financial: if they continue to pursue Microsoft and they lose, taxpayers will foot the ever-increasing legal bill. As it stands now, Microsoft said, the states will receive only a portion of their attorneys fees and costs, since they only prevailed on a few of their original allegations.


Breaking news
Judge: Case closed
A proposed settlement is given a nod
with few changes. What's next?


Kollar-Kotelly approved the proposed settlement with few additions, rejecting a call by the nonsettling states for stiffer sanctions. In a strongly worded decision, Kollar-Kotelly said that the remedies proposed by the plaintiff states were so outlandish that they amounted to an "unjustified manipulation of the marketplace" designed to give competitors such as Sun Microsystems, Apple Computer, and Red Hat an "artificial advantage."

Microsoft's Smith held out an olive branch, saying that "from our perspective, we want to have good and constructive relations with government officials. And that definitely includes all of the state attorneys general in this country."

History
Microsoft's latest legal woes began almost exactly five years ago, on Oct. 20, 1997, when the DOJ accused the company of violating an earlier antitrust settlement that took effect in 1995.

The allegations focused on a topic that was a hot issue at the time: the browser war between Netscape's Navigator browser and Microsoft's Internet Explorer. The DOJ's complaint claimed that Microsoft was about to begin telling computer makers that if they wanted Windows 95, they needed to install Internet Explorer 4.0.

That legal attempt failed, with an appeals court rebuffing the argument that Microsoft violated the original settlement deal. The DOJ and the state attorneys general responded by filing a new lawsuit in May 1998.

The case was assigned to U.S. District Judge Thomas Penfield Jackson, who eventually ordered that Microsoft be carved into two companies. But after Microsoft appealed, the U.S. Court of Appeals for the D.C. Circuit upbraided Jackson for violating judicial codes of conduct by chatting with reporters, and it removed him from the case.

The appeals court overturned the breakup order, but did agree with Jackson that Microsoft had violated antitrust laws and should be punished.

 

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