MS/DOJ - Dueling remedy proposals are far apart

A ruling due for release Friday from U.S. District Court Judge Colleen Kollar-Kotelly is expected to detail the remedies to be imposed on Microsoft Corp. in the landmark antitrust case filed against it by the federal government. What follows is a summary of a proposed settlement agreed to by Microsoft and the U.S. Department of Justice (DOJ) and nine states, which are plaintiffs in the case, and a summary of harsher remedies sought by nine other plaintiff states refusing to sign the proposed settlement.

In November 2001, Microsoft Corp. announced it had reached a tentative deal with most of its foes. As nine other states continued to push for tougher penalties, the Redmond, Washington, software maker began implementing changes in its software and disclosure policies to adhere to that proposed settlement. Under terms of the settlement agreement Microsoft must do the following:

-- Enable ISVs (independent software vendors) to develop competitive Windows middleware products. Aiming to create a more diverse market for desktop software, including Web browsers, e-mail clients, media players, instant messaging software, and future new middleware developments, Microsoft was required to provide software developers with the same APIs (application programming interfaces) and communication protocols it uses to build Windows-compatible software. Additionally, it must disclose code to allow non-Microsoft server software to interoperate with Windows.

-- Increase end-user access to third-party software, giving computer manufacturers the flexibility to install competing middleware products as the default applications that launch on Windows PCs. Hardware makers could still be required to ship Microsoft middleware on their PCs, but users would be able to remove access to those programs. PC makers would also be free to ship dual-booting PCs that launch Windows in addition to a separate operating system. Microsoft has since developed a program called "Set Program Access and Defaults" that allows users to manually set default startups. That was made available with a set of updates and security patches released to Windows XP users in early September and drew criticism from competitors for being inadequate.

-- Prevent retaliation against computer manufacturers. Microsoft was required to license its operating system to 20 top computer manufacturers on uniform terms for five years to ensure that it doesn't punish licensees who distribute software that competes with Microsoft. The company has responded by publishing to a secure Web site the licensing fees it charges those top OEM (original equipment manufacturer) partners.

-- Ensure full compliance with the proposed Final Judgment. This is a broad requirement that would force Microsoft to license any intellectual property necessary to allow a competing software vendor or PC maker to exercise the rights granted by the consent decree. Microsoft would be able to collect reasonable royalties on any technology given to its partners and customers.

-- Create a technical watchdog committee. A technical committee made up of three independent, full-time computer experts would be appointed to assist in enforcing the terms of the deal. The committee would be made up of one Microsoft appointee, one government appointee and a third member to be chosen by the first two appointees. They would have offices at Microsoft's headquarters and would receive full access to Microsoft source code and its executives. Additionally, Microsoft would appoint its own internal compliance officer.

A complete description of the proposed consent decree with the DOJ can be found online at: http://www.usdoj.gov/atr/cases/f9400/9495.htmNine states that didn't sign the proposed deal have argued that the settlement proposal doesn't go far enough to ensure that companies can compete against Microsoft's market dominance. They drafted their own set of requirements that were revised and argued before Kollar-Kotelly. Three months of hearings in the U.S. District Court for the District of Columbia were held to determine whether these remedy requests should be imposed on Microsoft beyond what it has already agreed to. Here are some of the requirements the suing states are seeking:

-- Require Microsoft to offer a "modular" version of Windows stripped of all the software code for its middleware products so that alternative applications can be used instead. For example, the stripped-down version could be shipped with a Netscape browser and a Real Player in place of Internet Explorer and Windows Media Player. The unbundled version should also be sold at a lower cost. Microsoft has complained that removing middleware code from the operating system would "cripple" other aspects of Windows and has argued that complying with such an order would force it to pull Windows off the market.

-- Require Microsoft to disclose certain technologies and APIs to software makers and partners that go beyond those it has already agreed to disclose, with the goal of making Windows compatibility even more easily achievable. Additionally, the states asked the court to make Microsoft agree not to engineer its projects in a way that would knowingly degrade the performance of competing applications.

-- Force Microsoft to make its popular Office desktop productivity software suite available for competing operating systems, including Linux and Macintosh. Although Microsoft already does this to a certain extent, the states are asking to require that Microsoft auction off the technology to a third-party software company that would be responsible for porting the Office software to other operating systems, in addition to selling and marketing those versions. Microsoft would be able to collect royalties from those vendors.

-- Require that Microsoft disclose and license the source code of its Internet Explorer Web browser to third-party developers so they can better develop applications that take advantage of the Web browsing software.

-- Distribute a full-featured JVM (Java virtual machine) with every version of its operating system and Web browser software to ensure that the latest Java applications will run on Windows. Microsoft currently ships its own JVM with Windows; however, it is based on 3-year-old technology. The company has more recently disclosed it will stop shipping Java on Windows.

-- Expand the uniform licensing policies to require Microsoft to license Windows to OEMs at a uniform cost that is published and not offer discounts to manufacturers that agree to a special partnership with Microsoft.

-- Force Microsoft to continue offering licenses for older versions of Windows, as well as to continue offering technical support for existing versions. The requirement aims to benefit PC makers so they can sell computers with the operating system version of their choice.

A complete list of the suing states' proposed consent decree can be found in a PDF document online at:http://209.190.248.167/issues/microsoft/pdf/020304-states-remedy-v2.pdf

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