For Microsoft, Ruling Will Sting but Not Really Hurt

…in May 1998, the company dominated the personal computer business and was aggressively moving into the markets for software for hand-held computers, cellphones, television set-top boxes and data-serving computers.

More than four years later, little has changed. And there is little in yesterday's ruling on sanctions in the case by Judge Colleen Kollar-Kotelly of Federal District Court in Washington that will slow down the big software maker.

By endorsing most of the Bush administration's settlement with Microsoft, reached last year, the judge adopted a fairly narrow view of the case and showed a reluctance to meddle in Microsoft's business practices and product designs. She rejected calls by nine dissenting states seeking tougher measures, like requiring Microsoft to offer a stripped-down version of its Windows operating system or to publish freely the programming code for its Internet browser.

In doing so, Judge Kollar-Kotelly chided the plaintiff states, writing that some of the proposed remedies appeared to be intended "simply for the sake of changing the status quo." In a passage that echoed Microsoft's complaint that its legal problems were the work of its rivals, she wrote: "Certain of Microsoft's competitors appear to be those who most desire these provisions."

Yet the ruling does not mean Microsoft is untouched. A federal appeals court last year found that Microsoft was a monopolist in the personal computer operating system market, and that it had repeatedly abused its monopoly power to thwart competition and stymie innovation. That means Microsoft is a court-decreed monopoly that is in the process of becoming regulated.

But based on Judge Kollar-Kotelly's ruling, that regulation will be done with a light touch. "It shows a great reluctance to go down the regulatory path," said Robert E. Hall, an economist at Stanford, who has done consulting work for Microsoft.

Her reluctance, Judge Kollar-Kotelly noted, was grounded in the appeals court's ruling of June 2001. It upheld the monopoly ruling of the district court and several of its findings against Microsoft, but it also narrowed the scope of Microsoft's liability and brushed aside the lower court's order to break the company in two.

Judge Kollar-Kotelly did try to strengthen the controls in the Justice Department's settlement, which was joined by nine other states, in a couple of areas. In what she termed the "most forward-looking" portion of her ruling, she required Microsoft to share more technical information with rivals like I.B.M., Sun Microsystems and others who make server computers, which act as the data-serving hubs of computer networks.

In taking up server software, she rejected Microsoft's objections, a rare setback in the ruling for the company. By singling out server software, she implicitly recognized the emerging threat to Microsoft from Linux, an increasingly popular operating system that is distributed free and updated by a community of volunteer programmers.

The judge's order requires Microsoft to disclose the communications protocols in its Windows desktop PC software, so that competitors' server software can work as smoothly with Windows as the server operating systems sold by Microsoft do.
http://www.nytimes.com/2002/11/02/technology/02IMPA.html