Judges Hear Challenge to Microsoft's Antitrust Settlement
Posted by: meshy on Nov 05, 2003 - 05:08 PM
Microsoft
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WASHINGTON - The outcome of appeals seeking tougher remedies against Microsoft remains in doubt after a one-day hearing Tuesday during which U.S. appeals court judges lobbed tough questions over the fine points of Microsoft's historic antitrust settlement with the U.S. government.
Two industry trade groups and the state of Massachusetts have filed separate appeals in which they claim a lower court judge should have imposed more stringent penalties against Microsoft for violating antitrust laws. The world's largest software company was found guilty of abusing its monopoly power in the personal-computer operating system market to snuff out competition in nascent markets.
``If this is allowed to stand, then our antitrust laws are not working,'' said Massachusetts Attorney General Tom Reilly following the court hearing.
For Microsoft, the stakes are high. The six-judge appeals panel has the authority to let the settlement stand, throw out the remedy altogether or send it back to the lower court for further review. A decision isn't expected for a few months.
Massachusetts, the Computer and Communications Industry Association and the Software and Information Industry Association are pushing for a remedy that would require Microsoft to sell a stripped-down version of Windows, without software code for Internet Explorer, its digital media player and other features interwoven into the code of its operating system. They're also pushing the company to release more detailed technical information to rivals to allow competing software to connect seamlessly with Windows.
The Bush administration and nine states reached a settlement agreement with Microsoft two years ago, but another group of states fought on. They went back to court seeking to prove that the settlement didn't go far enough to prevent Microsoft from future antitrust abuses, but Judge Colleen Kollar-Kotelly largely rejected their efforts. Only Massachusetts decided to fight on.
Key to the outcome is how much discretion the Justice Department should be granted in reaching a settlement in the first place, and how much deference the appeals court should grant Kollar-Kotelly in her review of the settlement. A few of the judges appeared skeptical that they should overrule her.
Under the settlement agreement and the remedy approved by Kollar-Kotelly, Microsoft is required to have an add/delete function that allows computer manufacturers to delete the icon linking consumers to the Internet Explorer browser, Microsoft's digital media player and other products.
However, the trade group's attorney, Robert Bork, argued that Kollar-Kotelly should have gone much further, requiring the company to sell a version of Windows excluding Internet Explorer's code. Computer manufacturers would then be more likely to sell their machines with Microsoft rivals' products included, they say.
The trade groups and Massachusetts say that as long as the software code is in place for Internet Explorer, competitors will continue to be at a disadvantage because software developers will continue to write applications relying on the Internet Explorer software code. They also argue that it will create consumer confusion.
Judge David Tatel said he ``may agree'' that the settlement still doesn't give proper incentives to computer manufacturers to sell machines with competitors' software. But even so, ``don't we owe any deference to Department of Justice and the judge?''
Judge Douglas Ginsburg was more direct in his skepticism. ``We were not contemplating that code would be deleted, only that access would be deleted,'' he said, referring to the appeals court's decision in 2001 when it found Microsoft guilty of abusing its monopoly power.
Attorneys representing Microsoft and the Justice Department defended the settlement, saying they addressed all the anti-competitive conduct spelled out in that decision, and even covered issues that went beyond the scope of the original case.
``To say this decree does nothing to remedy the conduct for which Microsoft was held liable is simply wrong,'' Justice Department attorney Deborah Majoras said.
But a few of the judges questioned whether the settlement deprived Microsoft of the ``fruits'' achieved by its anti-competitive behavior.
``Didn't Netscape Navigator have 85 percent market share?'' asked Judge Raymond Randolph. Today, Navigator has a tiny fraction of the Internet browser market while Microsoft's Internet Explorer dominates.
Judge Judith Rogers said it was important for an antitrust violator to face a penalty for its actions, ``otherwise monopolists could squelch all comers without consequence.''
Microsoft attorney Steven Holley said there was no proof that Microsoft's behavior had a direct effect on the demise of Netscape.
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