DOJ Wants Fast Track; New Mexico Settles

In a filing with the United States Court of Appeals for the District of Columbia Circuit, the Justice Department, the 17 states and the District of Columbia on Friday surprised some analysts by deciding not to appeal the appellate court’s decision in the Microsoft case. Instead, prosecutors petitioned the court to expedite the trial proceedings.

"Microsoft's operating system affects millions of businesses and hundreds of millions of consumers worldwide,” the co-plaintiffs wrote in their petition. “Delay in imposing an effective remedy inflicts substantial and widespread consumer injury and needlessly prolongs uncertainty in the computer industry.”

In the aftermath of the appeals court’s June 28th decision, many industry watchers speculated that the Bush administration would likely be more sympathetic to Microsoft’s plight than was the more activist Clinton Administration. Legal experts even raised questions about the diligence with which Attorney General John Ashcroft and, especially, his laissez-faire antitrust point man – Charles James – would pursue the case.

Some experts suggest that Friday’s action demonstrates that the Justice Department intends to zealously pursue the case, however.

“This does seem to indicate that Justice intends to pursue this more vigorously than Microsoft probably hoped,” agrees Kevin Fumai, an antitrust scholar at Seton Hall University. “[Microsoft] is probably happy that [the Justice Department and the states] aren’t going to appeal the court’s decision, but they’ve got to be concerned about Justice’s apparent desire to fast track this.”

In Friday’s filing, the Justice Department and the states argued that proceedings in the case should be accelerated because in the “dynamic marketplace” of the technology sector, "speed is of the essence in remedying the effects of unlawful exclusionary conduct designed to crush nascent competitive technologies. In these circumstances, the public interest is plainly served by allowing the proceedings on remand to go forward as quickly as possible."

Both sides have 45 days from the time of the ruling to seek a rehearing by the appeals court and – barring a rehearing – another 90 days in which to appeal the case to the Supreme Court. For its part, Microsoft Corp. has not publicly committed to a strategy one way or another.

"We continue to review the decision. We'll obviously be reviewing this motion, and we intend to move forward promptly on both of these fronts." Microsoft spokesperson Vivek Varma told The New York Times.

Microsoft has 10 more days in which to file a reply to the Justice Department’s request. Some legal observers, Seton Hall’s Fumai among them, suggest that it’s in the software giant’s best interests to drag the proceedings out as long as is possible.

“The biggest problem for Microsoft isn’t Justice, it’s the state attorneys general,” he says. “They want to buy more time so that they can try to settle with each of the states individually, just like they did with New Mexico last week. Really, the last thing that they want is for the proceedings to be accelerated.”

Late last week, Microsoft settled its antitrust suit with the state of New Mexico. The software giant made a number of concessions to state attorney general Patricia Madrid, agreeing to pick up the cost of the state’s attorneys’ fees – estimated at $100,000 over the past four years – and also agreeing that New Mexico could share in whatever final remedies are eventually determined as a result of the pending proceedings.

Rob Enderle, a senior analyst with Giga Information Group and a longtime Microsoft watcher, says that he expects that the software giant will probably attempt to pursue a similar strategy with several of the other state attorneys general, as well. “That seems to be a reasonable strategy,” he avers. “Again, the states represent the biggest roadblock to a peaceful settlement for Microsoft. They’ll try to settle wherever they can.”

But that’s not all. Microsoft has made at least one other significant concession in a further attempt to woo the state attorneys general.

Last Wednesday, for example, the software giant changed its Windows XP licensing agreements to give OEM manufacturers the freedom to remove some icons and other shortcuts from Windows XP’s desktop and “Start” menu. And in a more startling reversal, the folks in Redmond confirmed that OEMs could add shortcuts and icons from its competitors to the Windows XP desktop and Start menu, as well. The terms of the new licenses also allow OEMs to remove the Internet Explorer icon from older versions of Windows for the first time.

Microsoft had previously allowed OEMs to add icons on a one-for-one basis – in which case an icon for Netscape Navigator could be added to complement the Windows desktop’s Internet Explorer icon – but wouldn’t allow them to remove any of its default icons.

According to Giga’s Enderle, Microsoft actions could be just enough to satisfy prosecutors and at least safeguard the software giant’s Windows XP launch.

“It certainly casts Windows XP in a more favorable light,” he allows. “The belief right now is that since the Department of Justice said in the past that removing the icons is an okay way to deal with the problem, that it may be enough. So you can conceal these things if you want, you can replace them on the desktop with others – either of these may be enough.” Stephen Swoyer

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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