Judge extends Microsoft monitoring until 2009

States wanted five more years of antitrust oversight

U.S. District Judge Colleen Kollar-Kotelly extended portions of the landmark antitrust consent decree between Microsoft Corp. and state and federal antitrust regulators for another two years, until Nov. 12, 2009.

Eleven states, lead by New York and California, had asked that the monitoring of Microsoft's business practices continue for five years, until late 2012. Microsoft, on the other hand, had repeatedly argued that no further oversight was necessary.

Kollar-Kotelly explained the reasoning behind the extension in a six-page summary of her 78-page opinion, which she issued late Tuesday from her District of Columbia court. "The provisions of the final judgments have not yet had the chance to operate together as the comprehensive remedy the court and the parties envisioned when the final judgments were entered," she said.

She put much of the blame on the failure of the 2002 settlement to live up to its billing on Microsoft's shoulders, saying its foot-dragging was largely responsible. "Although the technical documentation project is complex and novel, it is clear, at least to the court, that Microsoft is culpable for this inexcusable delay. To be sure, the delay has developed in stages, and at each step Microsoft commendably has been willing to work with the plaintiffs and the TC to address issues and identify a means of resolving them.

"Nevertheless, practically speaking, Microsoft has never complied with § III.E," Kollar-Kotelly continued. "While Microsoft eventually proposed a plan that now appears to be producing the type of quality technical documentation required by § III.E, it did so in the face of mounting pressure from all plaintiffs and the court. In addition, there is no reason why the type of documentation finally being created could not have been created from the outset if the necessary resources had been devoted to the project.

The technical documentation that Kollar-Kotelly referred to was one of the major requirements of the consent decree, and forced Microsoft to document numerous Windows protocols so that rivals could create software that would work smoothly with Microsoft-powered servers. Those provisions -- in the section dubbed § III.E -- had already been extended for an additional two years, with Microsoft's consent, but the states claimed that the settlement was interconnected, and urged the judge to extend all the decree's rules if some had been.

"The court concludes that the § III.E delay, with its ramifications for the final judgments' overall implementation, is entirely incongruous with the original expectations of the parties and the court, and thus constitutes a 'significant change in circumstances' that warrants modification," reasoned Kollar-Kotelly.

Microsoft countered with a statement after the judge issued her ruling. "We will continue to comply fully with the consent decree," said Brad Smith, Microsoft's general counsel, in an e-mailed statement. "We are gratified that the court recognized our extensive efforts to work cooperatively with the large number of government agencies involved. We built Windows Vista in compliance with these rules, and we will continue to adhere to the decree's requirements."

The tussle over extending oversight had been relatively brief, but involved. In late August, the so-called California group of California, Connecticut, Iowa, Kansas, Minnesota, Massachusetts and the District of Columbia, said Microsoft should be watched until 2012 because "Microsoft's market power remains undiminished and that key provisions of the final judgment have had little or no competitively significant impact."

In a series of briefs filed during November, the U.S. Department of Justice urged Kollar-Kotelly to reject the states' arguments, but other states -- the "New York group" -- joined in calling for more monitoring after earlier seeming to agree with the DoJ.

At one point, the states said that oversight should be continued because without it, Microsoft might use the dominance of its Internet Explorer browser to stymie competition from Web-based applications and services. A similar line of reasoning was recently used by Opera Software ASA, the Norwegian browser developer, in its formal complaint to the European Union. The EU's antitrust agency announced earlier this month that it had launched a formal investigation of Opera's charges.

But while Kollar-Kotelly noted that the extension should not be "viewed as a sanction against Microsoft," she also said that Tuesday's ruling may not be the final word. "Ultimately, the court's decision not to extend the final judgments beyond Nov.12, 2009, now does not foreclose the possibility of doing so in the future," she wrote in the executive summary.

"The door likewise remains open for the court to reassess the need for continued oversight as the expiration of the final judgments in November 2009 approaches."

Copyright © 2008 IDG Communications, Inc.

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