States, Microsoft Rivals Prepare for Next Antitrust Battle

By Caron Carlson  |  Posted 2003-05-06

States, Microsoft Rivals Prepare for Next Antitrust Battle

It took the U.S. military less than one month to occupy Baghdad, but the states battling Microsoft Corp. because of its antitrust violations are gearing up for a sixth year of fighting.

Massachusetts and West Virginia this week attacked the court-approved antitrust remedies that the government agreed to in November 2001.

Nine states and the District of Columbia refused to sign the remedy settlement when the Department of Justice signed it in 2001, but only Attorneys General Thomas Reilly of Massachusetts and Darrell McGraw of West Virginia decided to continue the battle after the U.S. District Court for the District of Columbia approved the settlement last year. In a brief field with the U.S. Court of Appeals for the D.C. Circuit Monday, the two states argued that the remedies do not stop Microsofts illegal conduct, restore competitive conditions, or deny the Redmond, Wash., software giant the fruits of its anti-competitive behavior.

A major sticking point for the states is that the remedy does not require Microsoft to unbundle middleware code (for example, Internet Explorer code) from the Windows operating system. It does allow users and original equipment manufacturers to remove the middleware icon from the desktop. The so-called commingling problem was a key issue in the courts ruling that Microsoft illegally sustained a monopoly in the Intel-compatible PC operating system market.

"Only wishful thinking supports the district courts finding" that allowing OEMs and users to remove access to Internet Explorer will reduce the anti-competitive effect on rival software, the states wrote in their brief to the court.

In the next round of court appearances, scheduled for November, Microsofts adversaries will bring some celebrity power to the proceedings. Representing two trade groups seeking to bolster the states arguments will be Robert Bork and Ken Starr. Bork, a former judge in the U.S. Court of Appeals for the D.C. Circuit, became a household name when the Senate rejected his 1987 nomination to the Supreme Court following an acrimonious nomination process.

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In a brief filed on behalf of the Computer & Communications Industry Association and the Software & Information Industry Association, which represent Microsoft rivals, Bork and Starr criticized the district court for denying the trade groups request to intervene in the appeal. They also lambasted the remedy settlement, charging that it would not prevent Microsoft from illegally driving new middleware technology out of the market.

"Microsofts negotiations with the Government produced loopholes the size of triumphal arches through which Microsoft may march undeterred by the antitrust laws," Bork and Starr wrote.

CCIA and SIIA take issue with the API and protocol disclosure provisions in addition to the commingling provision. Because it allows Microsoft to use its own discretion in defining many of the disclosure obligations, including the definitions of "Windows Operating System" and "Microsoft Middleware," the provisions are meaningless, according to Bork and Starr.

"By giving Microsoft the power to define the scope of its obligations and requiring the disclosure only of technical information needed to run Microsofts own middleware, the decree allows Microsoft to deprive would-be competitors with broader or better products of the information they need to ensure that those products will run on Windows," they wrote.

The trade groups also questioned the stance of Judge Colleen Kollar-Kotelly, who approved the remedy settlement last November, on a number of procedural issues. Following the terrorist attacks of Sept. 11, Kollar-Kotelly ordered the parties to begin intensive settlement negotiations, but the "court did not explain how the issues here were affected by the attacks of September 11 and the subsequent `time of rapid national change," Bork and Starr wrote.

Also, CCIA and SIIA raised questions about the propriety of Microsofts lobbying and its incomplete disclosure about that lobbying. According to CCIA and SIIA, since 1998, Microsoft had engaged in intense lobbying campaign to end the antitrust litigation, but it did not fully divulge the contacts in Congress or the executive branch during the Tunney Act proceeding.

"[T]he court ignored widespread public criticism of the parties disclosures and excused what it admitted were borderline filings by both sides," Bork and Starr wrote, "The breadth of Microsofts effort to use political pressure to curtail this case is extraordinary."

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