Microsoft oversight extended to 2009

Microsoft's decadelong U.S. antitrust saga will lumber on into late 2009.

The federal judge overseeing the company's landmark settlement on Tuesday extended by two years the term of the consent decree, a multifaceted set of remedies meant to put competitors on equal footing with Microsoft and stop it from abusing its monopoly in computer operating systems.

Most of the provisions were to expire last November, five years after the settlement was reached among Microsoft, the U.S. Department of Justice and 17 states plus the District of Columbia. Had the judge let them end, it would have largely closed the book on a major era in the company's antitrust history, even as Microsoft faces greater scrutiny in Europe.

One key remedy of the consent decree required Microsoft to document and share with competitors so-called communications protocols — technical information needed to help non-Windows servers work with Windows computers as well as Windows servers do.

By holding back that information, Microsoft was found to have illegally leveraged its Windows monopoly to gain power in an adjacent market.

Early on, Microsoft dragged its feet in providing that documentation by not devoting enough resources to the effort.

U.S. District Judge Colleen Kollar-Kotelly, in a summary of her 78-page ruling Tuesday, wrote that the parties to the settlement — also referred to as a consent decree — anticipated that the documentation would be available by February 2003, at the latest.

"More than five years later, the technical documentation ... is still not available to licensees in a complete, usable, and certifiably accurate form," Kollar-Kotelly wrote.

In an attempt to make up for that delay, the parties had already agreed to extend this specific portion of the settlement to Nov. 12, 2009.

Last fall, several states argued that the entire settlement should be extended as well.

Kollar-Kotelly determined that the other remedies in the consent decree — including requirements for how Microsoft does business with PC makers — were designed to work in concert with the communications-protocols provision as part of a total package to repair damage that Microsoft's behavior did to the market.

But that total package has not had an opportunity to work as intended because of the delay, so the whole thing will be extended until at least Nov. 11, 2009.

The judge wrote that the extension "should not be viewed as a sanction against Microsoft" and that its willingness to negotiate rather than force litigation has been, in many respects, "a model for parties engaged in complex and protracted litigation."

In her summary, Kollar-Kotelly does not address whether the settlement has improved competition in the marketplace.

"The core of her reasoning appears to be that the court can't really assess the market impact of the [settlement] because it hasn't ever been given a full opportunity to operate as designed," Andrew Gavil, a professor at Howard University School of Law and a past critic of the settlement, wrote in an e-mail.

Microsoft has not yet decided if it will appeal Kollar-Kotelly's decision.

General Counsel Brad Smith issued a statement saying Microsoft "will continue to comply fully with the consent decree" and that Microsoft's latest operating system, Windows Vista, was built to comply.

Still, "there are a lot of other things you can do with monopoly power" that don't violate the consent decree, said Matt Rosoff, an analyst with Kirkland-based Directions on Microsoft.

For example, the estimated 80 percent profit margin the company makes on Windows has helped it fund other efforts in adjacent markets.

The decree does not prohibit Microsoft from competing as long as it does so on the merits of its products rather than by strong-arming PC manufacturers into loading their machines with Microsoft software or forestalling competition.

Microsoft faces stricter regulation in the European Union. In September, European regulators won a major antitrust case after a lengthy appeals process.

The same communications protocols were at issue in that case.

Another issue was the bundling of Windows Media Player with Microsoft's operating system.

Earlier this month, the European Commission said it would investigate complaints by Microsoft competitors that the company has illegally tied its Internet Explorer Web browser to Windows and is withholding interoperability information for a range of products including Office and server software.

"The European case has had a lot more effect on Microsoft's behavior, I think, than the [U.S.] consent decree," Rosoff said.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com