Judge Bork: Microsoft Settlement ‘Utterly Invalid’

WASHINGTON — The Commonwealth of Massachusetts and two industry trade groups told the U.S. Court of Appeals for the D.C. Circuit Tuesday the landmark anti-trust settlement between the Department of Justice and Microsoft has done nothing to remedy the monopolistic practices of the Redmond software giant.

In what is considered the last stand of critics who oppose the government’s settlement with Microsoft, Massachusetts, the Computer & Communications Industry Association (CCIA) and the Software and Information Industry Association (SIIA) are hoping to overturn the Nov. 1, 2002, remedy agreement approved by U.S. District Court Judge Colleen Kollar-Kotelly.

The settlement, which followed Kollar-Kotelly’s ruling that Microsoft was in violation of U.S. anti-trust laws, prompted Massachusetts and 18 other states to sue for better terms. Microsoft subsequently settled with the other 18 states, but Massachusetts has refused to come to terms. The CCIA and SIIA are appealing in separate litigation.

“There was no reason for the government to have negotiated away what they did. It (the settlement) doesn’t restore competition,” former judge Robert Bork, representing the CCIA and the SIIA and widely regarded as one of the nation’s leading anti-trust experts, told the judges. “What the government got in return was an utterly invalid settlement.”

Much of Tuesday’s legal arguments involved Microsoft’s continued ability to “co-mingle” its Internet Explorer (IE) browser code with its Windows operating system code. The settlement approved by Kollar-Kotelly does not prevent Microsoft from tying software like its Web browser, e-mail client and media player with its operating system, initially a cornerstone issue in the government’s case.

It does, however, require the company to provide software developers with the APIs for its middleware, allowing them to create competing products that can utilize the integrated functions Microsoft includes in its own products. It also gives computer manufacturers and consumers the freedom to substitute competing middleware software on Microsoft’s operating systems.

The practical effect has been that original equipment manufacturers can now sell computers without an IE icon on the consumer’s desktop screen, but IE code is still part of the operating system.

“The competitive efforts of the settlement are not cured by removing the icon,” Bork said. “Every developer knows this is a ubiquitous code. Every developer writes to this code.”

Bork urged the judges to end the co-mingling aspects of the settlement and force an open source, cross-platform standard for browsers.

“Icon removal can’t be explained as accomplishing anything,” Bork said.

Steven Kuney, an attorney representing Massachusetts, said, “These disclosure remedies will not bring any significant relief. The artificial bolting together of things that don’t belong together is not a remedy. In order to redress the problem, something has to be done about the (Microsoft) browser dominance.”

Microsoft attorney Steven L. Holley contended that “the existence of anti-competitive actions simply does not justify these extreme remedies.” Michael Lacovara, another attorney representing Microsoft, argued that the company has complied with the settlement and the fact that Microsoft has effected agreements with the all the states except Massachusetts is proof that the settlement is fair.

“(The anti-competitive) problem has already been remedied,” Lacovara said.

Following the hearing, the litigants held dueling press conferences in front of the courthouse.

“There are some basic principles at stake. No matter how powerful Microsoft is, will it be held accountable for its actions?” Massachusetts Attorney General Thomas Reilly said. “This settlement does not restore competition to the marketplace. Are the anti-trust laws of the nation going to be enforced?”

Former judge Ken Starr, who is representing the CCIA and SIIA along with Bork, added, “We need a decree that is actually remedial to restore competition.”

Bork refused to speculate on how the judges might rule.

“I don’t think they disclosed how they were thinking. The last time, we thought the government had lost and they ended up winning unanimously,” Bork said. “We are at a crossroads. If this decree stands, the Microsoft monopoly will continue to stand.

Microsoft’s general counsel, Brad Smith, said, “We fully agree to the (guilty) findings of the court and we have taken steps to rectify each and every violation.”

Smith added, “The Court of Appeals expressly allowed IE code (to be co-mingled with Windows). We have created broader freedom to create more choices for consumers. It is hard to buy a computer today without an AOL client on it or the RealPlayer client. The settlement agreement was to give consumers more choice and that is exactly what it is achieving.”

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