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States want to extend oversight of Microsoft

Ending court oversight of Microsoft’s business practices in November would not allow enough time to consider the antitrust implications of the new Windows Vista operating system, a group of states led by California said in a filing Thursday.
/ Source: The Associated Press

Ending court oversight of Microsoft’s business practices in November would not allow enough time to consider the antitrust implications of the new Windows Vista operating system, a group of states said in a filing Thursday.

U.S. District Judge Colleen Kollar-Kotelly, who oversees Microsoft Corp.’s adherence to the terms of a 2002 antitrust settlement, asked the software maker, the Justice Department and a group of states led by California submit reports by Thursday on the effectiveness of the consent decree.

The oversight aimed to make it possible for Microsoft’s middleware competitors — who build software that links the operating system with everyday programs — to compete fairly, even if Microsoft’s operating system monopoly persisted.

“Microsoft has not directly contravened these provisions,” said the states’ report, which was submitted by the office of California Attorney General Jerry Brown.

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But the California group said the consent decree has not led to any more competition. The report cites Microsoft’s continued dominance in the operating system market and the fact that few, if any, PC makers have sold computers with non-Microsoft Web browsers set as the default, among other examples.

One of the casualties of Microsoft’s business practices was Netscape. Its Web browser led the field until Microsoft started bundling its own Internet Explorer with Windows and restricting how PC makers installed competing products. It was eventually bought by AOL.

Antitrust concerns about Microsoft began surfacing with news of a Federal Trade Commission investigation in 1991, and in 1994 the software maker agreed to modify its contracts with PC makers to ease restrictions, which ended renewed U.S. and European antitrust investigations.

Another round of investigations led to a federal lawsuit that ended with a court declaration that Microsoft was using its operating system monopoly to squash middleware competition, and led to a settlement and the consent decree in 2002.

The California group said the January launch of Microsoft’s latest operating system, Windows Vista, changes the game.

“As a practical matter, termination of the Final Judgment means ... plaintiffs will not be able fully to assess the impact in the marketplace of Microsoft’s recent introduction of Vista,” the group wrote.

Utah and Florida, two of eight states plus the District of Columbia that make up the California group, didn’t sign on to the report.

“Right now, I’m confident that because of the lawsuit, consumers do have more choices,” said Utah Attorney General Mark Shurtleff in a phone interview. “I believe Microsoft has moved forward substantially, and that there are accomplishments with regard to Vista.”

The Florida attorney general’s office said it does not think that the consent decree was ineffective.

“We do agree, however, that we have not seen as much competition introduced as we expected,” spokeswoman Sandi Copes said in a statement.

In its report, the Justice Department said it appeared the consent decree was working. Web browsers like Mozilla’s FireFox and Apple Inc.’s Safari present “renewed competition,” as do the increasing popularity of programs available through a Web browser.

“The final judgments have been successful in protecting the development and distribution of middleware products and in preventing Microsoft from continuing the type of exclusionary behavior that led to the original lawsuit,” Thomas O. Barnett, assistant attorney general in charge of the Justice Department’s antitrust division, said in a statement.

The Justice Department said in its report that while Microsoft’s operating system market share hasn’t dropped because of the consent decree, “it would misapprehend the purpose of the Final Judgments to rely on these facts to argue that the Final Judgments have been ineffective. Microsoft was never found to have acquired or increased its monopoly market share unlawfully.”

In its own report, Microsoft directly countered California’s claims, saying, “The Final Judgments were never designed to reduce Microsoft’s share in any putative market.”

The Justice Department is expected to release a status report Friday on Microsoft’s compliance with the consent decree.