AAI Pushes Remedies Package for Microsoft

The American Antitrust Institute touts a package of conduct remedies it would like the government to impose on Microsoft to improve competition in the operating system market.

WASHINGTON -- The American Antitrust Institute on Friday touted a package of conduct remedies it would like the government to impose on Microsoft Corp. to improve competition in the operating system market.

The proposals focus on giving computer manufacturers the right to control the initial boot-up sequence of their products, requiring Microsoft to license DOS-based operating systems to third parties and breaking down applications barriers to market entry.

The court hearing on remedies is not slated to start for another five months, and the ensuing order might not be out until a year from now – at which point the upcoming Windows XP may have taken root in the marketplace.

For that reason, AAIs conduct proposals – offered as an alternative to the institutes preferred, but no longer available, option of breaking up the Redmond, Wash., company – take into account the launching of Windows XP.

"The greatest problem right now is that were not going to get remedy hearings until next spring," said Norman Hawker, AAI research fellow, at a press hearing Friday morning. "Nine months is a lifetime with some of these technologies."

First, under AAIs proposed scenario, Microsoft would have to end licensing practices that inhibit OEMs from choosing the applications that appear on the desktop and start menus. "Microsoft controls the out-of-the-box experience," Hawker said. "Everything you see on the screen the first time is dictated by Microsoft."

OEMs would be allowed to offer duel booting so that users could use either Windows or another operating system when they boot up, giving them perhaps an incentive to differentiate their products. "Computer manufacturers have been forced to manufacture essentially toasters," said Andrew Gavil, professor of law at Howard University in Washington.

Second, Microsoft would have to license the source code for DOS-based operating systems to third parties. The theory is that DOS-based systems will remain attractive to niche markets, such as enterprises running applications that wont work well with XP, and users looking for cheaper computers that dont require the power needed for XP.

However, even AAIs scholars are unsure whether this approach would have a significant pro-competition impact. "As to the size of the niche markets, I admit, its a gamble," Hawker said.

Third, Microsoft would have to accept several requirements aimed at eliminating applications barriers to entering the OS market and promoting the growth of middleware.

These requirements include carrying Sun Microsystems Inc.s Java "virtual machine" as a component of the Microsoft operating system in order to ensure that a cross-platform middleware product is also available; ending proprietary extensions to products, standards or features available today in the public domain; carrying competitors middleware products, such as Netscapes Web browser, RealPlayers multimedia software and Apples multimedia software, in the operating system; open sourcing its own middleware products, including Internet Explorer; porting applications to competing platforms; and giving independent software developers the same access to source code, technical information, plans and training as it gives its own developers.

The court should also appoint a special master to oversee and enforce whatever remedies it imposes, the AAI said.

The recent false advertising lawsuit Novell Inc. had brought against Microsoft could potentially be cited as evidence of continued anti-competitive behavior, Hawker said. But it is also unlikely that the Microsoft and Novell will reach a quick settlement in that matter because Microsoft faces little, if any, incentive. Also, punitive damages are difficult to secure in a false advertising case, he said.