States Call for Extension of Microsoft Decree

Published November 1, 2007

Contending Microsoft still is in position to abuse its dominant position in PC operating systems, six states and the District of Columbia pressed the federal judge overseeing the 2002 antitrust consent decree to extend the terms past November 12, the date they are to expire.

Attorneys general in California, Connecticut, Iowa, Kansas, Minnesota, Massachusetts, and Washington, DC want Judge Colleen Kollar-Kotelly to keep the consent decree in place five more years, largely to ensure Microsoft’s new Vista operating system continues to comply with the decree’s terms.

The antitrust settlement was aimed at preventing Microsoft from using the strength of the 95 percent share enjoyed by its Windows operating systems to block competition in other software products. For example, Microsoft cannot make deals with computer makers to prevent factory loading of competing software.

The original complaint in the Department of Justice’s antitrust case was that Microsoft, by bundling its Internet Explorer Web browser with Windows and giving it away free, illegally drove Netscape out of the browser market.

Google Weighs In

At issue this time around is Google’s complaint about Microsoft’s bundling of Desktop Search, which the software sets as a default search option on the Vista toolbar. Users who want to use Google’s search engine must disable Desktop Search and reset their toolbars themselves. Google this summer filed an amicus curiae brief in support of extending of the consent decree. (See “Google Seeks Federal Review of Microsoft Desktop Search Software,” IT&T News, September 2007.)

Most observers say Kollar-Kotelly will lift the consent decree when it expires.

“Kollar-Kotelly has made it quite clear that Microsoft has complied with everything the court had said it had to do,” said David Kopel, associate policy analyst and research director at the Independence Institute. “[Microsoft] has made clear it will continue to comply after the consent decree expires.”

Difficulty Showing Harm

Kopel says Google’s assertion is without merit and that Microsoft, while positioned strongly in PC operating systems, has never been able to leverage that dominance in OS for handheld PDAs and phones, media, search, or gaming. Kopel also said bundling is a common practice in other areas of commerce and that it has consistently proved difficult for the government to demonstrate consumer harm when companies offer a product for free.

Kopel equally contests the states’ contention that the consent decree is needed because the potential for abuse still exists. “That’s not the way it works,” said Kopel. “You can’t restrain a company because it might do something in the future. If they do something in the future, then bring a case.”

States Persist

The six states urging continuation of the consent decree were part of the so-called California group–states that joined the original federal case after mulling antitrust action on their own. Two states that were part of the group, Florida and Utah, did not join the new push–officials in the two states said the consent decree had been effective.

The upcoming expiration comes as Microsoft has suffered two setbacks in international circles. In September, the European Court of First Instance upheld a decision by the European Commission that Microsoft had competed unfairly in bundling Windows Media Player with Windows. (See story on opposite page.)

The company also failed to win an open standards designation for its Office XML, which it was attempting to position as a competitor in the market for office applications software based on open source software and interoperability. (See story above.)

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.