A federal court is still weighing the efficacy of a proposed antitrust settlement signed between Microsoft Corp. and the Department of Justice in November, but the Redmond, Wash., software maker nonetheless must meet several deadlines under the deal this month. As the same court considers whether stricter antitrust penalties are necessary, Microsoft is trumpeting the steps it is already taking to remedy its illegal conduct.
The settlement inked with the Justice Department and nine states is considerably more lenient than an alternative remedy proposal sought by nine other states. Both proposals address the need for Microsoft to disclose more technical information, give developers a way to remove access to the companys middleware and provide greater flexibility to OEMs, but the proposals differ dramatically in the degree to which Microsoft must pursue those goals.
Tomorrow, under the terms of the settlement proposal, Microsoft will launch a program to license 113 communications protocols for other vendors to use to interoperate with Windows 2000 Professional, Windows XP and future versions of Windows. The licensing program, which the company described as novel, is based on 12 tasks that reflect how Microsofts server operating systems interoperate with desktop operating systems.
While the alternative remedy proposal sought by the non-settling states requires Microsoft to share technical information more broadly, the Justice Department settlement permits Microsoft to charge royalties and reasonable licensing fees — which the company is not listing publicly — for the protocols.
“Theres very substantial IP and valuable technology in these protocols,” Brad Smith, senior vice president of law and corporate affairs, said in a conference call with reporters this morning. “The prices for the protocols are very small relative to the price of the products.”
Beginning Aug. 28, Microsoft will also make available for free 272 internal application programming interfaces for five middleware features defined in the proposed settlement: Internet Explorer, Windows Media Player, Windows Messenger, Outlook Express and the Microsoft Java Virtual Machine. The stricter remedy proposal sought by the states more broadly defines the scope of middleware subject to the anti-trust penalties.
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Under a security exception outlined in the proposed DOJ settlement, Microsoft may withhold APIs and communications protocols, and so far the company has chosen to withhold one API related to the Windows File Protection system and one protocol related to a particular method of signing data sent over a network. The company emphasized the limited nature of the disclosure withholdings. “The number of things were withholding is two,” Smith said.
By the end of the summer, developers and users will be able to hide or remove access to the five Microsoft middleware products outlined in the settlement. When Windows XP Service Pack 1 is shipped – sometime between late August and late September – it will include a new add/remove program, called “Set Program Access and Defaults,” which can be launched from the Start menu and from the Add or Remove Programs utility in Windows XP and Windows 2000 Professional
Also this month, Microsoft launched new uniform licensing terms for the top 20 OEMs that license Windows. Based on feedback from OEMs since February, Microsoft increased its patent indemnification, added a warranty regarding virus testing, increased OEMs flexibility in ordering, billing and auditing, and provided additional testing and recovery options.
In talking with reporters, Smith said that Microsoft has “erred on the side of reasonableness” in implementing the proposed settlement and reinforced compliance as a corporate commitment and personal responsibility throughout the company.
“Everyone who works at Microsoft has been receptive [to the settlement obligations],” Smith said. “We need to take these kinds of steps if were going to win back the confidence of people in the government and in the industry.”
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