End of an era: Microsoft antitrust oversight ends

A U.S. court's antitrust oversight of Microsoft is ending after eight and a half years, with some observers questioning what the long fight accomplished.

Judge Colleen Kollar-Kotelly's oversight of a twice-extended November 2002 settlement agreement between Microsoft and the U.S. Department of Justice ends Thursday. In recent years, Kollar-Kotelly, of the U.S. District Court for the District of Columbia, has focused primarily on a small piece of the settlement -- bugs in technical documentation for communication protocols Microsoft was required to share with competitors.

The DOJ, in a statement released Wednesday, hailed the antitrust case, which started in 1998, as good for the competitive landscape in the IT market. The antitrust judgment protected the development and distribution of middleware and allowed consumers to have choices, the DOJ said.

"The final judgment ... prevented Microsoft from continuing the type of exclusionary behavior that led to the original lawsuit," the DOJ said. "Microsoft no longer dominates the computer industry as it did when the complaint was filed in 1998. Nearly every desktop middleware market, from Web browsers to media players to instant messaging software, is more competitive today than it was when the final judgment was entered."

The antitrust agreement also lead to "competitive conditions" that enabled new products, including cloud computing and mobile devices, to develop as potential threats to the Windows desktop operating system, the DOJ said.

Microsoft would only release a statement to mark the end of the case: "Our experience has changed us and shaped how we view our responsibility to the industry. We are pleased to bring this matter to successful resolution, and we are excited to keep delivering great products and services for our partners and customers."

The main allegation in the original lawsuit, filed by the DOJ and the attorneys general of 19 states and the District of Columbia, was that Microsoft had illegally maintained its monopoly in PC OSes by excluding competing middleware from its OS. An appeals court upheld the antitrust claims in June 2001.

The court-monitored antitrust judgment prohibited the company from penalizing computer makers that shipped products with competing middleware or OSes installed. The judgment required the company to disclose its middleware interfaces to independent software developers and computer makers, and it required the company to license OS communications protocols to third parties.

Analysts agreed that the case didn't have a major impact on Microsoft, but one said it may have given some other companies a leg up.

The ruling had some "psychological" effects on the company, said David Mitchell Smith, an analyst with Gartner. "When you put a company under scrutiny and you handcuff them a bit in terms of what they can do, it changes their attitude and outlook and cramps their style," he said. "But fundamentally all the remedies that came out of it were pretty minor."

A lot has changed in the technology market since the ruling but not because of it, he said. "The whole tech landscape has changed and Microsoft is no longer the big threat that they were. I don't think what happened with the antitrust case is what did that," he said. Microsoft wouldn't have excelled in some of the new markets like social networking and mobile even if it hadn't lost the case, he said.

The ruling did lead to a major change inside Microsoft though, said Al Gillen, an analyst at IDC. "It had a profound impact on Microsoft in terms of product packaging plans," he said.

Over the years there have been many instances where Microsoft would have liked to integrate multiple products but it didn't for fear of rekindling antitrust concerns, he said. For instance, Microsoft ultimately integrated its Hyper-V hypervisor into other products. "But only after VMware drove the market cost down to zero for a hypervisor," he said. "Initially Microsoft had a stand-alone product which has seen little adoption."

In some cases, Microsoft was less ambitious or aggressive about going into emerging market opportunities because it struggled to figure out ways to go after them without running afoul of antitrust issues, he said. "There were a lot of technical decisions that percolated up into the legal department to make sure they could do what they were planning to without causing problems," he said.

Still, those internal decisions ultimately had little impact on the company's ability to be a leader in new markets, he said. "It's not so much that Microsoft missed an opportunity to become a competitor but it missed an opportunity to prevent others from being leaders," he said.

"I think it's fair to say Microsoft was on better behavior because of the outcome of the antitrust litigation," he said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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