Economics of Networks
US and some States settle with Microsoft
By Nicholas Economides
November 8, 2001, Incomplete, not for quotation
Last Updated: 11/8/2001
Disclaimer: I am not a consultant of the United States Department of Justice, Microsoft, or any of the Attorneys General of the 19 States and the District of Columbia that have sued Microsoft
On November 2, 2001, the United States and Microsoft proposed a settlement in the major antitrust case. U.S. District Judge Colleen Kollar-Kotelly gave until Tuesday 11/6/2001 to the plaintiff States to decide whether to settle as well. Among the States, New York, Illinois, North Carolina, Kentucky, Michigan, Louisiana, Wisconsin, Maryland and Ohio settled on 11/6/2001. California, Connecticut, Iowa, Massachusetts, Minnesota, West Virginia, Florida, Kansas, Utah, and the District of Columbia will pursue the suit further to a full remedies trial.
Summary of Proposed Microsoft Settlement of November 6, 2001
A. Provisions seen as favorable to Microsoft
1.
No breakup
There are no structural changes, such as a breakup of
Microsoft.
2.
Microsoft can
expand functions of Windows
Microsoft can add any functions it wants to the
operating system
3.
No restrictions
on bundling
There are no general restrictions imposed on product bundling
by Microsoft
4. No wide disclosure
of source code
Mandated disclosures are limited to interfaces
B.
Provisions seen as favorable to the plaintiffs
1. Broad
scope of definition of middleware products
The settlement defines "middleware" to
include browser, e-mail clients, media players, instant messaging software, and
future new middleware developments.
2. Requirement
to partially disclose middleware interfaces
Microsoft will be required to provide software
developers with the interfaces used by Microsoft's middleware to interoperate
with the operating system.
3. Requirement
to partially disclose server protocols
The settlement imposes interoperability between
Windows and non-Microsoft servers of the same level as between Windows and
Microsoft servers.
4. Freedom
to install middleware software
Computer manufacturers and consumers will be free to
substitute competing middleware software on Microsoft's operating system.
5. Ban on
retaliation
Microsoft will be prohibited from retaliating against
computer manufacturers or software developers for supporting or developing
certain competing software.
6. Uniform
pricing of Windows for same volume sale
Microsoft will be required to license its operating
system to key computer manufacturers on uniform terms for five years. Microsoft
will be allowed to provide quantity discounts.
7. Ban on
exclusive agreements; contract restrictions
Microsoft will be prohibited from entering into agreements requiring the exclu