Disagreement Over End of Microsoft Oversight

As the end of most court-ordered oversight of Microsoft nears, the U.S. Department of Justice (DoJ) and five states that are parties to the software giant’s 2002 antitrust settlement Thursday filed a review of the case with the court.

Their verdict: It worked. The market’s equilibrium has been restored. Witness the healthy competition in the browser market with Internet Explorer slugging it out against Firefox, Opera, and Apple’s Safari. The same goes for the media player market, with the success of RealNetworks and Yahoo.

Meanwhile, Apple’s iTunes and Adobe’s Flash products are pre-eminent, and Dell and Lenovo are selling systems with Linux. Finally, Web-based email, including offerings from Google and Yahoo have a plethora of users, despite Microsoft’s Hotmail service.

In fact, other than a previously agreed to extension of oversight of Microsoft’s communications protocol licensing for two more years, continued oversight is no longer needed when it expires in November, the filing says.

However, six other states and the District of Columbia, which refer to themselves as “the California Group,” and that also participated in the antitrust settlement, respectfully disagree. The California Group, which includes California, Connecticut, Iowa, Kansas, Minnesota, and Massachusetts, has filed its own report.

Their verdict: The agreement hasn’t worked and things have only gotten worse – Microsoft’s dominance is stronger than ever.

“On the contrary, IDC data show that Windows’ share of server operating system shipments has increased from 55% in 2002 to 72% in 2006,” the California Group’s report states.

And as far as increased competition in the browser market goes – one of the areas that spurred the case into being in the first place – think again.

“Largely due to the success of Mozilla’s Firefox web browser, Microsoft’s [IE] usage share has slipped from 95 percent in 2002 to 85% in 2006 – still well above monopoly levels,” the California Group’s filing continues.

The DoJ and the states that believe the antitrust settlement has worked – known as “the New York Group” – reply that the intent of the law and the appeals court ruling was not to break up Microsoft’s monopoly. The New York Group includes New York, Louisiana, Maryland, Ohio, and Wisconsin.

“The [court’s final judgment] … did not afford a basis for extinguishing Microsoft’s
Windows monopoly position or for reducing it by a particular amount,” the DoJ’s filing argues. Instead, the goal was to stop Microsoft from using its dominance to suppress competition and thus allow healthy markets to develop, which the filing asserts has been achieved.

Both filings come in preparation for a status conference to be held September 11, before Federal Judge Colleen Kollar-Kotelly, who has presided over the settlement agreement’s implementation.

One analyst tends to side with the DoJ’s view that competition has been restored to the market.

“[Today] Microsoft is still the big bad wolf but one that is being stalked by all the other new age wolves,” Dwight Davis, vice president of researcher Ovum Summit and a long-time Microsoft watcher, told Internetnews.com. “In the current environment, I don’t think that most people believe that Microsoft can wield monopoly power with impunity,” he added.

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