Judge’s ruling positions Microsoft for new markets



On November 1, 2002, U.S. District Court Judge Colleen Kollar-Kotelly’s approved most of the provisions of an antitrust settlement reached in 2001 between Microsoft and the U.S. Department of Justice.

First Take

Judge Kollar-Kotelly’s approval gives a huge victory to Microsoft and a setback to the states that sought further sanctions against the software giant. Using sometimes blistering language, the judge criticized the states’ efforts to go beyond the original case and said they had done little to prove their case. The Justice Department, a partner in the almost-unchanged settlement, declared victory as did the dissenting states although they had to look very hard to find any benefits. Kollar-Kotelly’s judgment will hold members of Microsoft’s board of directors more accountable – though how remains unclear.

Kollar-Kotelly made some minor modifications to the settlement; some actually softened it. For example, no technical committee will examine Microsoft’s software for compliance with the settlement’s terms. Instead, an overseeing board that includes Microsoft employees will do so. The judge seemed satisfied that the settlement preserves competition in what will likely be the biggest future threat to Microsoft – server software.

Microsoft now has a very strong position to go after new markets enabled by its .Net initiative, handheld devices and television. But the battle hasn’t completely ended. The European Union continues to examine the issue, and private and class action lawsuits remain outstanding. After all, Microsoft was found guilty of abusing its monopoly powers, and authorities are investigating new allegations. However, neither the Appeals Court nor the original settlement nor Kollar-Kotelly’s ruling resolved the real legal issue – tying software products together. With no legal precedent set, the industry may see this issue reappear.

Gartner believes Microsoft will change little beyond the relatively subtle changes seen since the settlement. The settlement’s approval should not affect any enterprise decisions. Few if any awaited this announcement, nor should they have.

Analytical Source: David Smith, Gartner Research

Recommended Reading and Related Research

“Antitrust Compliance Steps Won’t Hurt Microsoft, Help Customers” – Microsoft begins compliance with the settlement agreement although it likely won’t affect Microsoft or its customers. By David Smith

“U.S. Appeals Court Finds for Microsoft, Mostly” – Although a victory for Microsoft and its technology strategy, the court condemned some of Microsoft’s past business practices as illegal. By David Smith, Thomas Bittman and Neil MacDonald

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