Microsoft Verdict — A Win Win Settlement? - Company Business and Marketing

EDP Weekly's IT Monitor, April 3, 2000

U.S. District Judge Thomas Penfield Jackson, the presiding federal judge in the Microsoft antitrust case, has extended his deadline for a settlement agreement among the parties until April 5, 2000. Presumably this is because the federally authorized mediator, Judge Richard Posner has given Judge Jackson at least some basis for believing that the potential for a settlement exists among the parties. Microsoft has moved substantially off of its earlier positions although the government negotiators have argued that the number and nature of the concessions do not warrant a settlement agreement. Microsoft, on the other hand, believes that both the nature and the degree of its offers provide the government with more than they might otherwise obtain even under a court decision. A negotiated settlement also offers the prospect of a prompt agreement in the highly accelerated time frame of the high tech races, rather than the slower time frames involved through the appellate process. At the time this publication went to press (March 31), the settlement discussions were scheduled to intensify over the weekend of April 1 and 2. The intensified schedule has caused concern among many of the individual states which have little potential for being able to participate in a meaningful way in this schedule.

Absent an agreement from the parties, the mediation efforts will end on April 5, and Judge Jackson will issue his decision. There is sufficient uncertainty in the environment to compel the parties to make good faith and intensive efforts to negotiate a settlement. Microsoft can only lose from the issuance of a significantly adverse decision, both in terms of the litigation itself, and in terms of other litigation that will inevitably flow from the antitrust suit. Its global strategic interest can best be protected in a settlement. The government, on the other hand, has its own interests to preserve which include obtaining the reforms its considers necessary to the marketplace in a timely fashion without the extensive delays involved in the appellate process. With the multiplicity of parties involved in the litigation, the government, Microsoft, the individual states, and the plethora of private companies that have individual rooting and lobbying efforts because of their extensive economic interests, any settlement is likely to result in disenchanted parties voicing objections. However, the sheer importance of the case, both in terms of the administration of the antitrust laws, and its significance with respect to the technological revolution ongoing in the country, would seem to compel a settlement in which both sides can claim victory.

It is assumed that much of the criticism of Microsoft's movements and offers are simply tough talk designed around a negotiating strategy by DOJ and other parties to the suit. Microsoft had recently offered to provide computer makers a version of Windows which did not include access to Internet Explorer; common prices for Windows without regard to cooperation from computer makers and access to application software.

The nineteen state attorneys general who are involved in the suit, will play little role over the weekend and will have only two days in which to ratify it. This will inhibit the states at having any impact on the final negotiations although the Department of Justice will presumably have their consensus opinion available during these final negotiations. The states are essential to a settlement, although unless they can function as a coherent whole in partnership with the DOJ, their impact might ultimately be disruptive rather than constructive to a final settlement.