Microsoft Antitrust Case

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The Appeal Contd...

Analysts felt that as Microsoft geared for the release of its next generation Windows XP package, it seemed to be trying to forestall any interim efforts by prosecutors to reengineer XP or halt its October 25 release by stretching out the judicial review. Microsoft was likely to prolong the legal battle as many PC makers planned to sell XP loaded products over the Internet before the release date. However, this was not likely to go down well with the Justice department, which might try to opt for an interim action that Microsoft was trying to preempt. Analysts also felt that by bundling a package of programs into XP⁵-in the same way it bundled its Web browser with Windows 98, Microsoft was repeating the pattern that got it into trouble in the first place.

Allowing XP to go forward could severely harm Microsoft competitors and ultimately, consumer choice. In August 2001, the new District Court judge handling the Microsoft antitrust case ordered both the parties-Microsoft and the US Government-to report on the remaining issues in the legal battle by September 14 and scheduled a meeting on the status of the case for September 21. Judge Colleen Kollar Kotelly said Microsoft and the US government should also identify ways to resolve the remaining issues, decide whether any additional evidence were to be presented and submit a proposed schedule for the proceedings. In late August 2001, the DOJ urged the Supreme Court to reject Microsoft's request for reconsideration of the appeals court ruling that the company had violated US antitrust laws. The DOJ said that it would be a mistake for the Supreme Court to review a portion of the case before the District Court had resolved the entire case. The Supreme Court was expected to decide whether to hear the case after the judges returned from summer recess in October.

The Options Before DOJ

In September 2001, the DOJ said that it would ask for restrictions on Microsoft's business tactics. One option could be to force Microsoft to open its source code for the Windows operating system-to competitors. Said an analyst, "The biggest thing they will probably do will have some agreement on how much code Microsoft makes available so folks can make programs that fit in with Windows more readily." Analysts also felt that publishing the Windows blueprint would ensure that other software makers had the same access to the system's design as Microsoft's own programmers had.

Another option was to allow PC original equipment manufacturers (OEMs) to configure Windows any way they liked, removing Microsoft programmes, adding rival programs, and even changing the entire appearance of Windows. Said an analyst, "The measure of success (of a remedy) will be the degree to which the PC OEMs have the freedom to address their markets the way they want to address them."

The Damage is Done

Analysts felt that whatever be the outcome of the legal battle between Microsoft and the US Government, the ruling that Microsoft was a monopoly left the company open to a deluge of private suits. The company may face legal action over the inclusion of media-playback and instant messaging software in its new Windows XP operating system due for sale from October 2001. The ruling could also encourage regulators in Europe, where the European Union's (EU) competition commissioner, Mario Monti had ordered an investigation into Microsoft's conduct.⁶

Another result of the trial was that Microsoft would be widely distrusted. However, analysts felt that the trial had brought some benefits for consumers. The trial had prompted Microsoft to abandon many of its restrictive licensing agreements with PC makers. As a result, it was possible to buy PCs with Linux, a free operating system, rather than Windows, installed as standard. Before the trial, this seemed to be impossible, since PC makers did not want to offend Microsoft, which might have cut off their supplies of Windows.

Exhibits

Exhibit I: US Antitrust Policy
Exhibit II: Chronology of Events in the Microsoft Antitrust Case

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5] Microsoft planned to introduce Internet features such as instant messaging and streaming media capabilities in Windows XP.
6] The EU is investigating whether Microsoft is trying to damage rivals by introducing media player into its Windows XP operating system. The EU said that media player could not be removed by computer makers or consumers, and that places Microsoft's rivals at a disadvantage. The EU was also investigating whether one version of Microsoft's operating system, Windows 2000, was designed to work better with its own servers than those of rivals.