Friday, November 9, 2001

State attorneys general have split over the settlement reached last week between Microsoft and the Justice Department. While a majority of them have agreed to the provisions of what appears to be a more-than-reasonable agreement, a few are holding out for reasons that remain unclear, but motives that are wildly suspect.
The former shouldn’t be surprising. After all, clarity was one of the critical items lacking in the Clinton-era prosecution, since consumers were never harmed in a demonstrable way, even by Microsoft’s more unsavory actions. Meanwhile, the bias of U.S. District Judge Thomas Penfield Jackson was all too evident throughout the anti-trust trial. The U.S. Court of Appeals for the District of Columbia gave him a rather severe dressing down, revoking his original breakup order.
Since the Justice Department insisted that Microsoft had committed some sort of offense, the revised settlement reached last week seemed to make sense for both parties. Microsoft would receive five years of federal oversight, share some of its Windows coding with its competitors and modify its contract-making arrangements with hardware makers. In return, it would stay intact and go about its business that of making relatively user-friendly software at relatively user-friendly prices.
That didn’t come across as very consumer-friendly to Thomas Reilly, the attorney general of Massachusetts, who proclaimed, “There’s no question in my mind that Microsoft will use this agreement to crush competition.” This sentiment was echoed (albeit less strongly) by attorneys general from eight other states and the District of Columbia, all of whom plan on continuing litigation against Microsoft.
Those decisions may have more to do with state spending than the protection of state citizens. All nine objecting states are either already running or are projected to run significant deficits this year. Many of their attorneys general had a great deal to do with the $206 billion settlement that states won from tobacco companies a few years ago, money that states subsequently burned through on all kinds of non-smoking related enterprises, ranging from making sidewalk improvements (non-Microsoft settler California, whose projected deficit this year is $9.5 billion) to underwriting an insurance account for public employees (non-Microsoft settler West Virginia, which is running a $3 million deficit).
Consumers following the money don’t have far to nose before scenting something rotten. As rancid as the original prosecution of Microsoft was, the actions of the holdout state attorneys general smell even worse. Neither justice nor consumers are served by the state-imposed kickbacks for which the states appear to be hoping. It is time to bring this judicial sophistry to a screeching halt. It is time for the states to settle with Microsoft.

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