Posted on: Friday, November 1, 2002

Industry awaits Microsoft ruling

By Jonathan Krim
Washington Post

WASHINGTON — A federal judge will issue rulings today in the Microsoft Corp. antitrust case that could affect profoundly not only the software giant's future but also how antitrust law will be applied in the digital age.

At 4:30 p.m., U.S. District Judge Colleen Kollar-Kotelly in Washington will disclose how severely Microsoft will be sanctioned for illegally protecting its monopoly over personal computer operating systems.

In doing so, she will decide whether a Justice Department settlement with the company is sufficient to rectify the company's conduct, or whether stiffer provisions sought by a coalition of state prosecutors would be more appropriate.

Kollar-Kotelly, who had no previous experience with antitrust or technology cases and often seeks middle ground, also could borrow from each prosecutorial approach and impose her own set of remedies.

She has been considering her decision since June, when she concluded three months of hearings to determine how wide-ranging the restrictions on Microsoft should be.

The hearings focused on the state prosecutors' proposals, since the Justice Department and Microsoft already had struck their deal, which requires judicial approval. But Kollar-Kotelly decided not to accept the federal agreement until the states presented their proposals and Microsoft had a chance to argue against them.

The states argue that Microsoft's actions warrant sanctions that would allow competition in the future while stopping practices found to be illegal.

The states have asked, among other things, that Microsoft be forced to sell versions of its operating system that do not include applications such as the Internet Explorer browser and its digital media player. Makers of competing applications would then have a more level playing field, providing consumers more options, the states argued.

Microsoft said such unbundling would be technically impossible and grievously damage the company.

Kollar-Kotelly got the case in September 2001 after a federal appeals court threw out a lower court order that Microsoft be broken up into separate companies, and tossed the trial judge off the case.

But the appeals court upheld many of Judge Thomas Penfield Jackson's key findings that Microsoft had broken the law in its efforts to quash competition from Netscape Communications Inc.'s Internet browser and Sun Microsystems Inc.'s Java technology. Both, the judge found, threatened Microsoft's Windows operating system monopoly.

The appeals court ordered new hearings on how the remaining portions of the case should be resolved.

Legal experts view the complex, nearly 5-year-old case as the most important antitrust action in a generation. It has attracted the attention and sometimes participation of many leading antitrust lawyers, scholars and economists, as well as major technology companies that compete with Microsoft. It also has been an expensive and unique legal slugfest involving one of the world's richest and most powerful companies, an icon of the information age.

No matter how the judge rules, any of the parties could appeal.