Feds Agree to End Antitrust Oversight of Microsoft

After May 12, Microsoft will no longer be the subject of antitrust oversight as U.S. Department of Justice lawyers have agreed to let the 10-year-old settlement between the United States and Microsoft expire.

Aspects of Microsoft’s business have been monitored closely since November 2001, when the two sides reached a settlement over antitrust concerns. The company was required to allow computer manufacturers to replace its software with third-party alternatives, license certain parts of its patent portfolio, and allow oversight of its books, systems, and personnel (to ensure compliance).

This week’s developments bring to a close a significant chapter in tech history, which at one point dominated the tech news cycle. It still does to some extent: just look at the pages and pages of stories here on PCWorld, and recent comparisons of current antitrust issues to the Microsoft case.

Microsoft compliance was sufficient

Justice Department lawyers said at the hearing that it appears Microsoft has made sufficient effort to comply with the terms of the deal, and therefore the Justice Department will allow the settlement to expire without objection on May 12. Microsoft said that it plans to continue compliance after the deal’s expiration, and that it is “pleased” by the results of the hearing.

Microsoft reportedly has some 400 employees working directly on settlement compliance. It’s not clear what will happen to these workers–whether they’ll be laid off, or transferred elsewhere. Microsoft could benefit from being able to make decisions much quicker, without the need for DOJ regulators to sign off on them.

That said, Microsoft still has antitrust concerns with the European Union: it reached a deal with government regulators there in 2009. This deal could still affect the company’s global decisions, as Microsoft will need to be aware of moves that could anger regulators overseas.

Redmond’s decreasing relevance in tech

There is another explanation as to why regulators are backing off of Microsoft, and that’s the company’s changing position in the market. In the late 1990s and early 2000s, Microsoft was a much more powerful player.

It held the browser market by a stranglehold with Internet Explorer, and had a commanding position in operating systems with Windows.

Fast forward to 2011: Internet Explorer continues to lose share in the face of Mozilla’s Firefox and an insurgent Google Chrome. Efforts the mobile market have seemingly fallen flat: Windows Phone’s share is in the single digits while Android, iOS, and RIM carry the lion’s share of the market.

Even in desktop operating systems, Microsoft seems to be in trouble. Although Apple’s gains are not massive, the company continues to slowly eat into Windows’ share of the market, thanks to its strong notebook line.

While I’m reluctant to tie the antitrust settlement’s effects to Microsoft’s stumbles (I’d argue these have more to do with bad business decisions), Redmond certainly isn’t the behemoth that it used to be.