• United States

Consumer groups to intervene in Microsoft settlement

Jan 03, 20036 mins
Enterprise ApplicationsMicrosoft

Two groups representing consumers and software developers want to intervene in the government’s antitrust case against Microsoft in the hope of toughening terms of the settlement approved by a federal judge in November.

Two groups representing consumers and software developers want to intervene in the government’s antitrust case against Microsoft in the hope of toughening terms of the settlement approved by a federal judge in November.

The two groups, the Consumers for Computing Choice (CCC) and the Open Platform Working Group, on Tuesday filed a motion to intervene in the case on the grounds that the settlement will harm both consumers and software developers.

The motion follows a similar move two weeks ago on the part of two other groups, The Computer & Communications Industry Association (CCIA) and the Software and Information Industry Association (SIIA), and an appeal of the settlement by Massachusetts and West Virginia.

The CCC and the Open Platform Working Group are seeking the right to appeal the settlement under the Tunney Act, which stipulates that before entering any final antitrust judgment courts must consider the competitive impact of the judgment, the effect on the public generally and on individuals alleging specific injury from the antitrust complaint.

James Turner, a consumer interest lawyer who heads the CCC, said that the settlement between Microsoft, the U.S. Department of Justice and nine states that sued the software maker injures both software consumers and software developers by not going far enough to open Microsoft product source code to outside developers and to encourage innovation.

“Our basic argument is that we need to have interoperability for the 70,000 applications that Microsoft has. People have to be able to write programs to them,” Turner said.

Nobody from the Open Platform Working Group could be reached for comment.

Microsoft’s dominance of the computer software industry is similar to the Bell system’s dominance of the telecommunications industry in the 1980s, Turner said. Just as the Bell system exerted a stranglehold on the telecommunications industry, Microsoft is throttling innovation by trying to control new technologies and mete them out in a way that maximizes profits rather than opening those technologies to unfettered development and competition in a worldwide community of software developers, Turner said.

The antitrust settlement, which was approved in November by U.S. District Court Judge Colleen Kollar-Kotelly, prohibits Microsoft from retaliating against computer makers or independent software makers that consider “developing, distributing, promoting, using, selling or licensing any software that competes with Microsoft Platform Software or any product or service that distributes or promotes any Non-Microsoft Middleware.”

Such middleware includes Web browsers, instant messaging and software for playing music and video files, as well as other products. Specifically, Microsoft’s middleware products include Internet Explorer, Windows Media Player and Windows Messenger, as well as Outlook Express and its Java virtual machine.

But Turner said that middleware is only part of the picture and does not, in itself, address the overall competitive problem posed by Microsoft’s dominance of the software industry.

“Microsoft has a toll bridge on the information superhighway and we want it to be a public road,” Turner said. “We’re happy with Microsoft putting vehicles on the road, but we’re not happy when they say that only their vehicles can pass on the toll road that they own.”

According to Turner, Judge Kollar-Kotelly misunderstood the fundamental issues at stake in the antitrust complaint filed against Microsoft, latching on to the issue of middleware while ignoring other ways Microsoft uses its operating system monopoly to stifle development of software applications that use competing systems.

While the CCC acknowledges that it does not have the same right to intervene in the case as a Microsoft competitor would, the group is asking Judge Kollar-Kotelly to use her discretion and the guidance of the Tunney Act to allow the CCC into the case to file an appeal, according to Turner.

If that fails, Turner said the CCC will turn to the U.S. Court of Appeals in Washington, D.C., to consider the request to intervene.

The CCC may have a better chance in the appellate court, where there may be dissatisfaction with the settlement approved by Kollar-Kotelly at the District Court level, Turner said.

Several other groups have already filed motions to intervene in the case.

Two weeks ago, the CCIA and the SIIA, filed a motion directly with a federal appeals court in Washington, D.C., to intervene in the case and appeal Kollar-Kotelly’s decision. These groups also cited the Tunney Act.

Kollar-Kotelly issued a memorandum in July last year that said Microsoft and the Justice Department had complied with Tunney Act guidelines that require the two sides to review documents filed by a wide variety of interested parties. However, the CCIA and SIIA pointed out that many of these documents indicated that the settlement was not in the public interest.

Meanwhile, the case is also being kept alive by Massachusetts and West Virginia, which are appealing Kollar-Kotelly’s settlement decision.

Those appeals aside, legal experts expressed doubts that the motion to intervene filed by the CCC and the Open Platform Working Group would be accepted.

“This is just another interest group that isn’t happy with what happened,” said Bob Schneider, head of the Intellectual Property Department at the Chicago law firm of Chapman and Cutler.

“I think that at the District Court level they went through all the required analysis and my guess is that the appellate court would rubber stamp (the settlement). After all, seven of the nine states agreed to the settlement and said it was a victory,” Schneider said.

While the attorneys general in Massachusetts and West Virginia, and even for some of the states that signed off on the agreement, may agree with the CCC’s assertions, Schneider said that there’s little justification for overturning Kollar-Kotelly’s decision at this point.

“These groups aren’t producing new evidence or some totally different position. (Kollar-Kotelly) has a pretty good record and did a thorough analysis of everything and it’s not findable that there was some huge error,” Schneider said, putting the chances for success in the appellate court at less than 25%.