Microsoft Settles with Five More States and D.C.

The six settlements will cost Microsoft approximately $200 million in vouchers.

Microsoft Corp.s long journey through antitrust litigation—and the $1.55 billion that the company has agreed to pay out so far—has taught it to build better relationships with competitors and with the government. Also, the software giant must be more active in standards initiatives, such as those under way for Web services, Brad Smith, company general counsel, said today.

Declaring that Microsoft is more than halfway through its pending legal challenges—including those with the federal government, states, competitors and the European Union—Smith announced new settlements with five states and the District of Columbia.

The six settlements will cost Microsoft approximately $200 million in vouchers, which consumers, students and schools can use to buy hardware, software and technical support services. Two of the six new agreements—those with Kansas for $32 million and D.C. for $6.2 million—have received preliminary court approval. Settlements with North Carolina, Tennessee, North Dakota and South Dakota await court approval.

Five states—Arizona, Iowa, Minnesota, New Mexico and Wisconsin—have not yet reached agreements with Microsoft. In addition, Microsoft faces ongoing challenges from the European Union, Massachusetts and four competitors, including Sun Microsystems Inc.

"We obviously have some big antitrust issues that remain," Smith said in a conference call early Tuesday with reporters. "It would be unwise for us to take anything for granted."

One year ago, the Redmond, Wash., company won court approval of a settlement with the Department of Justice and a number of states that had joined the case. Massachusetts, however, continues to fight for stricter antitrust remedies and will present its case in court next Tuesday.

Last week, Judge Colleen Kollar-Kotelly, who approved the federal settlement, raised questions about Microsofts compliance, particularly in licensing its protocols to competing software developers on a reasonable and non-discriminatory basis. Only nine companies have been licensed to date.



"Antitrust Judge Wants Details of Microsoft Deals."

Smith said today he believes Microsoft is making progress despite a challenging environment for licensing, but that the company needs to do more. The company adjusted the program over the summer to make the terms simpler and less expensive, and it continues to work toward making the program more accessible, he said.

Reasonable and non-discriminatory "doesnt mean that we have the ability or the duty to exhort or enforce people to get them to sign," Smith said. "Were focused on ensuring that people understand what the program is."

Smith downplayed other questions that were raised last week regarding compliance with separate provisions in the federal settlement, including the inability to disable Windows Messenger. "At any given time there are always going to be a number of questions that people have," he said, adding that the "right to look at these kinds of questions" is "a natural and important part of life."

Suits brought by competitors continue to cost Microsoft time in court as well. The case brought by Sun is in the early stages of what could be protracted litigation.

"Theres a long way to go," Smith said about the Sun case. "No one expects that theres going to be any short end to the litigation path."

According to Smith, the bevy of litigation the company has faced results in part from larger disagreements between Microsoft and its competitors.

"We hope that there may come a day in the future when the relationship between the two companies is much more constructive than it is today," Smith said.

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