- The Washington Times - Wednesday, June 30, 2004

ASSOCIATED PRESS

A U.S. appeals court yesterday unanimously approved the landmark antitrust settlement Microsoft Corp. negotiated with the Justice Department, setting aside objections by Massachusetts that sanctions were inadequate against the world’s largest software company.

In a significant victory for Microsoft and the Justice Department, the appeals court ruled 6-0 that the settlement was “in its entirety” in the public’s interest.

In exuberant language, the U.S. Circuit Court of Appeals for the District of Columbia applauded provisions of the complex settlement that permit computer makers to hide Microsoft’s built-in Web browser software so that consumers can more seamlessly use software from Microsoft’s rivals.

“We say, Well done!” the court wrote.

Microsoft’s top lawyer, Brad Smith, described the decision as a “clear and emphatic message” that its settlement with the Bush administration was proper.

The appeals court said an alternative proposal from Massachusetts to require Microsoft to remove parts of its software from the dominant Windows operating system could hurt consumers by leading to a confusing world with different versions of Windows.

“Letting a thousand flowers bloom is usually a good idea, but here the court found evidence … that such drastic fragmentation would likely harm consumers,” the court wrote.

The court also rebuffed a plan by Massachusetts to require Microsoft to reveal the secret blueprints for its Web browser, saying such a move might help the company’s rivals but not help competition flourish.

Massachusetts’ attorney general, Tom Reilly, called the decision “bad news for consumers, bad news for competition and ultimately bad news for our economy.”

“This clearly shows that our antitrust laws are not effective in protecting consumers,” Mr. Reilly said. “Our high-tech economy will not reach its full potential unless regulators and the courts are willing to deal with Microsoft and its predatory practices.”

The decision is a significant milestone in the long-running antitrust case. Any court-ordered changes to the design of Microsoft’s lucrative Windows software would have reverberated through homes, industries and governments because its products run more than 95 percent of the world’s personal computers.

The ruling followed a March 24 decision by European antitrust regulators, who concluded that Microsoft unfairly hurt rivals by building its multimedia software into Windows.

The European Commission fined Microsoft a record $613 million, but it agreed last month to temporarily suspend its decision pending a ruling on whether sanctions should be delayed while Microsoft appeals.

The central question for the appeals court involved how much deference judges should show toward the settlement negotiated by the Bush administration and Microsoft lawyers.

That agreement, approved in November 2002 by U.S. District Judge Colleen Kollar-Kotelly, was aimed at giving consumers more choices by, among other things, helping rivals develop competing software on computers running Windows. The provisions expire in 2007.

Microsoft shares rose 6 cents to close at $28.56 on the Nasdaq Stock Market.

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