Settlement: Oversight Committee Provides Teeth

The oversight committee created in the antitrust settlement between Microsoft and the U.S. Department of Justice qualifies as the "teeth" of an agreement otherwise blasted by the state attorneys general and competitors as being too soft.

The jury’s still out on how effective the proposed settlement agreement between the DOJ and Microsoft will prove to be, assuming it goes forward without the unanimous agreement of the states involved in the case.

It lacks many of the substantive concessions for which antitrust advocates were pushing –- break-up into separate application and operating system software companies; full disclosure of source code; and substantive conduct remedies.

But it does call for the establishment of a panel committee to oversee Microsoft’s behavior that could prove to be the last, best hope for antitrust enforcement authorities and for Microsoft’s competitors alike.

Rob Enderle, a senior analyst and long-time Microsoft watcher with consultancy Giga Information Group, claims that it’s the establishment of an oversight committee that gives the settlement agreement its “teeth.”

“It’s got teeth, and the teeth are in the oversight committee, which can rapidly respond to any breach that Microsoft undertakes,” he says. “Remember, [the committee] has broad investigatory powers, it has access to Microsoft’s books to do whatever it needs to do. It has the one thing that the initial Consent Decree didn’t have, and that’s the ability to kind of alter itself and directly address new and emerging problems as they occur.”

The oversight committee will be composed of three members, one of whom will be chosen by Microsoft and one of whom will be selected by the DOJ. Both members must then agree upon the selection of a third member. The committee will have what’s been described as “full” access to Microsoft’s books, to its source code and to its personnel. In this regard, the committee can act independently -– if it determines that Microsoft has engaged in anti-competitive or illegal behavior -– or, separately, if one of the software giant’s competitors (such as, for example, Sun Microsystems Inc.) asks it to investigate a potential Microsoft infringement. Just what the committee is empowered to do -– short of blowing the whistle -– remains another matter, however.

Regardless, most observers say that the composition of the oversight committee will to a large extent determine its overall effectiveness. More to the point, some analysts argue, the committee’s efficacy could hinge almost entirely upon the selection of its third and final member.

If, as expected, Microsoft and the DOJ appoint sympathetic representatives to positions on the committee, a third jointly selected member will probably wield decisive, tie-breaking power. That member could also determine whether or not the oversight committee aggressively monitors the software giant’s behavior -- or gives it a pass. Because of this, the committee’s role is also fraught with danger, argues Giga’s Enderle.

“It hinges greatly on the people on the oversight committee. If they’re weak, then Microsoft will just keep on doing the same things it’s been doing. If they’re strong and want to destroy the company’s agenda, they can abuse that power, too. So coming up with a balance is going to be crucial here,” he suggests.

But other observers suggest that discussion of this kind misses the point because, they argue, it’s doubtful that the oversight committee will be able to accomplish much of anything. Most question its power and limits and others suggest that it’s really nothing more than a paper tiger.

“How much power do they really have? If Microsoft misbehaves again, what’s the scope of their authority?” demands Kevin Fumai, an antitrust scholar at the Seton Hall University Law School. ”It looks to me like the most they can do is blow the whistle and extend the length of their own employment by another two years.”

For his part, Giga’s Enderle suggests that an oversight committee without clearly defined power can still pack some punch. “They’re going to have full access to Microsoft’s books and source, so they can audit them, they can blow the whistle on them –- and they can do it as often as they like. Also, they can listen to complaints from Microsoft’s competitors and follow up on these. [If nothing else,] they can make life much more difficult for [Microsoft],” he says.

About the Author

Stephen Swoyer is a Nashville, TN-based freelance journalist who writes about technology.

comments powered by Disqus
Most   Popular