Microsoft rivals lament settlement as weak

By Brian Bergstein, The Associated Press
Saturday November 03, 2001

SAN JOSE — Competitors complained Friday that Microsoft Corp.’s settlement with the federal government will do little to protect them or consumers from the software giant’s monopoly power. But they held out hope that state attorneys general could make the deal more restrictive. 

“My guess is that all Bill Gates could do was to suppress a big grin when he held his press conference this morning,” said Mitchell Kertzman, chief executive of Liberate Technologies, a rival provider of software for interactive TV. 

“This settlement doesn’t come close to matching the scope of the violations of antitrust law that Microsoft has been convicted of,” he added. “It was an inexplicably bad deal for the government.” 

Microsoft and the Justice Department presented the settlement to a federal judge Friday, saying it would end the antitrust case in a way that would help the sagging economy. 

U.S. District Judge Colleen Kollar-Kotelly agreed to review it and gave the 18 states involved in the case until Tuesday to decide whether to accept the plan. 

Several competitors called on the state attorneys general to insist on making changes to the settlement. Sun Microsystems Inc.’s general counsel, Michael Morris, said the Justice Department was “walking away from a case they had already won.” 

“This agreement allows a declared illegal monopolist to determine, at its sole discretion, what goes into the monopoly operating system in the future,” said Kelly Jo MacArthur, general counsel for RealNetworks Inc., which makes music and video software threatened by Windows Media Player. “This is a reward, not a remedy.” 

Paul T. Cappuccio, the general counsel for AOL Time Warner Inc., said the settlement “does too little to promote competition and protect consumers, and can too easily be evaded by a determined monopolist like Microsoft.” 

The state attorneys general had been pressing for stiffer penalties, but on Friday, several said progress had been made. 

“Those of us in New York these days believe that good things happen in extra innings,” said New York Attorney General Eliot Spitzer. “I think we’re now at the bottom of the ninth.” 

Several tech executives said the settlement was too focused on restricting Microsoft’s Windows monopoly, and not its broader business practices and new initiatives. 

“We’re quite disappointed. We believe there are a lot of issues that haven’t been addressed,” said Michael Mace, chief competitive officer of handheld computer maker Palm Inc., which makes an operating system that competes with one from Microsoft. 

For example, some rivals point out that Microsoft has kept secret key technical details of its Internet initiative, known as .NET, in hopes of making it the de facto standard system for Web transactions. Some competitors say .NET programs should be made to work with their own Web interfaces. 

IBM Corp., which makes business software that conceivably could benefit if .NET programs were opened up, wouldn’t comment. Neither would Oracle Corp., despite chief executive Larry Ellison’s fondness for needling Bill Gates, nor Internet giant Yahoo! Inc. 

One reason few large technology companies are willing to openly criticize Microsoft is that Microsoft is so far-reaching, even its competitors likely will need to work with it at some point. 

In fact, the industry has changed so much since the Clinton administration first sued Microsoft in 1997 — alleging that it unfairly forced PC makers to sell the Internet Explorer Web browser — that even formerly unabashed rivals now find themselves aligned with Microsoft. 

For example, Netscape Communications Corp. co-founder Marc Andreessen pointed out to The Associated Press in July that his current company, Web services firm Loudcloud Inc., “has a really close partnership with Microsoft.” Andreessen declined to comment Friday. 


AP Technology Writer May Wong contributed to this report. 


On the Net: 


Coalition of competitors: http://www.procompetition.org