Microsoft: The Battle Isn't Over

The Justice Dept.'s proposed settlement of its long-running antitrust case against Microsoft (MSFT) has come in for a tremendous amount of well-deserved criticism. Unfortunately, much of the griping has focused on the government's failure to put stronger locks on the doors of stables from which the horses have long since bolted.

It is true that the agreement would do little or nothing to prevent a repetition of Microsoft's domination of the browser market through integration with Windows. It's also irrelevant, because the fight for the desktop is over. Microsoft won, perhaps unfairly--but irreversibly.

That said, the agreement can be strengthened, either in renewed negotiations or in litigation carried on by the nine states that have refused to endorse the deal. I would make sure that any additional remedies prevented future anticompetitive behavior by Microsoft in fields where it will count. That means barring the company from leveraging its desktop monopoly into dominance of such growth areas as networking, including home networking, and Web services, such as Microsoft's own .NET initiative and competing services from Sun Microsystems, IBM, and others.

Microsoft has not been shy about trying to gain that leverage. With Windows 2000 and Office 2000, it achieved tight integration between workstations and corporate server computers. With Windows and Office XP, the integration is extended to Web servers that provide .NET services. For now, this is limited to such things as notifying you of the arrival of new messages in your Hotmail inbox. In time, however, these Web services could drastically change online commerce and the exchange of information in business.

In theory, independent software developers are free to take advantage of this integration, but they need details on how it works. The proposed agreement does nothing to assure them of the access they need to applications programming interfaces (APIs) and communications protocols, which provide the links to other programs and to networks. The agreement requires Microsoft to provide the links as late as the last major test release of new versions of Windows or key components, such as the Internet Explorer browser.

This would be too little, too late. By the time of the "last major beta test release," Microsoft's own developers will have been working with the new code for months. Outside developers should get access at the time of the first external test release--typically six months to a year earlier. That's when Microsoft's own programmers and favored independent developers get the code.

KEEPING MUM. Equally important is assuring that the information Microsoft gives developers is complete and accurate. Independent developers have long complained that Microsoft provides incomplete documentation of the interfaces. And they charge that in its own applications Microsoft uses APIs that only it knows about.

Making sure disclosure is complete is an enforcement issue, and here, too, the agreement falls short. Microsoft compliance is to be monitored by a technical committee made up of three-members: the first chosen by Microsoft, the second by the government, and the third by Microsoft and the government. The rules forbid membership to people who have done work for Microsoft or its competitors and prohibit them from doing such work for two years after leaving. This effectively bars service by anyone with current commercial software experience, which is to Microsoft's advantage.

Judge Colleen Kottar-Kotelly has the final word on the appointments. But as Microsoft showed in its fierce and ultimately successful battle to block the appointment of Lawrence Lessig, a law professor then at Harvard University and now at Stanford University, as an adviser to Judge Thomas Penfield Jackson in an earlier case, the company will do everything it can to get a committee that favors its cause. The judge would be better served by appointing a traditional special master with the knowledge, resources, and power to make sure the terms are enforced fairly and strictly. He or she should be allowed to consult with developers at Microsoft's rivals.

These modest changes won't change the agreement into the tough settlement Microsoft's critics want, but that is no longer in the cards. The improvements would at least help make sure that the concessions that the government has won are meaningful as we move to the next generation of software. By Stephen H. Wildstrom

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