Q&A: What's at stake in Microsoft case

WASHINGTON -- The nearly 5-year-old Microsoft antitrust case will reach a pivotal turning point today when the U.S. judge overseeing the case decides what remedy to impose on the company for illegally maintaining its operating systems monopoly.

The ruling will be released at 4:30 p.m. and posted on the court's Web site.

What follows is a guide to some of the choices and issues faced by U.S. District Court Judge Colleen Kollar-Kotelly.

Q: What are the stakes today for Microsoft?
In a word, huge. The judge could order Microsoft to produce an unbundled version of Windows, free of applications other than the operating system. Microsoft Chairman Bill Gates says unbundling is impossible and that he will pull Windows off the market if that's the remedy. But the judge could rule in Microsoft's favor by backing the U.S.-brokered settlement and rejecting the remedies sought by the nonsettling states.
Q: What are the judge's choices?
The judge is considering starkly different remedy plans. The first is a settlement reached last fall between Microsoft and the Bush administration and nine of the 18 states. The nine states that rejected that settlement filed their own remedy plan. The U.S.-led settlement is, in effect, the baseline -- the minimum remedy that Microsoft faces. The judge must decide whether the nonsettling states, in the three-month-long remedy hearing that ended in June, successfully made a case for penalties that exceed that settlement.
Q: What does the U.S.-Microsoft settlement seek?
The U.S.- and Microsoft-backed remedy requires Microsoft to offer PC makers uniform terms and prices. It also compels Microsoft to disclose middleware interfaces and server protocols, potentially giving developers new paths to interoperability with Windows. PC makers can include rival applications without fear of retaliation and hide end-user access to Microsoft's bundled products. U.S. Attorney General John Ashcroft said the settlement will "ensure that consumers have more choices."
Q: What do the nonsettling states want?
The nine nonsettling states say the settlement is full of loopholes and won't introduce competition or deprive Microsoft of the "fruits" of its practices. Under their remedy plan, Microsoft will have to make the software code for Internet Explorer open source, as well as make it possible to port Office to other operating systems, such as Linux. A stripped-down version of Windows that would allow PC makers to add applications "cafeteria style" is part of that. The nonsettling state remedies include interface disclosure and antiretaliation provisions similar to those in the U.S. settlement.
Q: The nine nonsettling states are?
California, Connecticut, Florida, Kansas, Iowa, Massachusetts, Minnesota, Utah and West Virginia, as well as the District of Columbia.
Q: How did the case get to this point?
The initial trial began in the fall of 1998. U.S. District Judge Thomas Penfield Jackson found that Microsoft had a monopoly in operating systems. That's not illegal. But the judge ruled that Microsoft had broken the law to maintain that monopoly, and seeing it as a threat to competition, he ordered the company broken up. Microsoft appealed, and an appellate court overturned Jackson's remedy as well as significant parts of the ruling. It said a new remedy was needed. That prompted the U.S. settlement, the rejection by nine states and the new round of hearings before Kollar-Kotelly.
Q: Could today's ruling bring an end to this case?
Maybe. The judge may craft a ruling acceptable to both sides. It may also trigger a new round of settlement talks. But new appeals by either side are possible, which would prolong this case for at least another year.
Q: Does Microsoft have other antitrust problems?
Yes. Competitors, including Sun Microsystems Inc., have filed private antitrust lawsuits. These use the ruling in the government's case as their starting point. There is also an ongoing European Union antitrust case.
Weigh in on the Microsoft case and today's decision in our online Computerworld forum.

Copyright © 2002 IDG Communications, Inc.

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