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Microsoft Settlement Draws Mixed Reaction - 2001-11-02


The announcement of a settlement in the U.S. government's anti-trust case against software giant Microsoft has drawn a mixed reaction. Many analysts applaud the constraints that will be imposed upon Microsoft, some feel they don't go far enough.

At the heart of the anti-trust case was Microsoft's practice of "bundling" its windows software - selling several software applications together as one package.

Prosecutors charged that bundling forced a customer who wanted one of Microsoft's applications to take them all, and thereby froze competitors out of the market.

The settlement requires Microsoft to provide information to help rival companies make products compatible with its Windows operating software.

This, Washington anti-trust attorney Jerome Hochberg says, is designed to separate Microsoft products and make it easier for consumers to mix other companies' software with Microsoft's.

"It enables the computer makers of the world to include other people's software and integrate it into the Windows operating system," he explained. "So it's designed to make it easier for competitors in the software area to work with the windows operating system."

But the Windows operating system is old news, says Brookings Institution economist Robert Litan.

And while the settlement forces Microsoft to compensate for past mistakes, he says, it does not prevent the firm from doing the same thing in the future.

"Microsoft has released XP or is going to be releasing it, its next operating system. It has all these new features in it like video playing and music playing and instant messaging that are now bundled with XP," he said. "And the Justice department settlement doesn't address any of these new bundling issues."

Jerome Hochberg concedes that the settlement does punish Microsoft. He questions, however, whether such punishments are severe enough to fit Microsoft's crimes.

"I think they came away with a very mild judgment against them, given the nature of their offense. They did behave illegally and very aggressively so, and very obviously so, and there aren't too many companies in the history of the anti trust laws that have done so," Mr. Hochberg said.

Others who have broken the anti-trust laws so egregiously, Mr. Hochberg says like Standard Oil in the early 1900s, saw their companies broken up by the Federal government.

But Robert Litan points out that the Microsoft case is not over. The settlement still must be reviewed by a Federal judge, he says, and the 18 U.S. states that joined in Microsoft's prosecution have until November 6 to approve the terms.

"The question going forward is whether there will be more aggressive remedies imposed, either as a result of the states moving forward in this case, or because the European Union is now investigating Microsoft for newer activities that have taken place since the [U.S.] government here brought its case ," Mr. Litan said.

Despite the settlement with the U.S. Justice Department, Mr. Litan says, the Microsoft case is far from over.

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