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Thursday, 28 June, 2001, 18:59 GMT 19:59 UK
Reaction to the ruling
Bill Gates and Appeal Court logo
US prosecutors said they were "considering... options", after an appeals court jeopardised their success in winning sanctions against Microsoft.

The US Department of Justice (DoJ), which launched the current anti-trust case in spring 1998, said it was "reviewing the court's opinions" before deciding on future action.

The department is also set to discuss options with US president George Bush.

In industry reaction, Sun Microsystems said it hoped a court would still punish Microsoft for illegal behaviour, bringing its monopoly to an end "forcefully and permanently".

Attorney general John Ashcroft said the ruling was a "significant victory".

He said his department would pursue the best interests of the American people and explore all further avenues to that end.

Pleased

"The president... will await Justice Department review and study," said a White House spokesman, who added that it was "too soon to make any conclusions" about the future course of the case.

While the appeals court decision to order new hearings is likely to see Microsoft escape break-up, as ordered last June by Judge Thomas Penfield Jackson, the DoJ said it was "pleased" that findings of anti-competitive behaviour were upheld.

"We are pleased that the Court of Appeals found that Microsoft had engaged in illegal conduct to maintain its operating system monopoly," the DoJ said.

Own goal?

This reaction was reflected at ProComp, a campaign group launched in 1998 to protect "competition and consumer choice in the electronic marketplace".

Kenneth Starr
Kenneth Starr: new trial "an opportunity"
"The... decision means that two different courts have looked at Microsoft's conduct, and both courts have ruled that Microsoft has abused monopoly power in the market," said spokesman Kenneth Starr, the former US solicitor general.

Thursday's decision may even prove an own goal for Microsoft, by allowing investigation into its behaviour surrounding the launch of new dot.net and HailStorm products.

"The new trial court will be able to review these initiatives, and will see that Microsoft's actions have become even more anti-competitive than before," Mr Starr added.

ProComp president Mike Pettit said the "next key step" in the campaign would be to see the response of the DoJ.

"The recommendations from the Justice Department on how to deal with Microsoft's illegal conduct will be one of the defining moments for the Bush administration."

Impact on rivals

ProComp is backed by firms including Corel, Oracle and Sun Microsystems.

Oracle, the world's second largest software giant, told BBC News Online it would not be commenting itself on the decision.

But researchers said that, as the anti-trust case focused on desktop software markets, it would have few implications for the likes of Oracle and Sun Microsystems, which develop products for other areas.

"The ruling probably has no relevance for Microsoft's competitors... as there is no real competition in desktop software," said Robert Becker of Argus Research.

Sun 'decisive action' call

Sun welcomed the fact the court had, in part, agreed that Microsoft had engaged in illegal anticompetitive behaviour.

"As the case is turned over to the district court, we hope that the court will act decisively to ensure that Microsoft's illegal activity - and the harm that it has done to the industry and to consumers - is brought to an end forcefully and permanently," a spokesperson said.

"To that end, Sun supports measures that will increase competition in the computer industry and protect internet technologies from becoming the proprietary preserve of any one company."

Sun said this included "structural remedies" (in other words, break-ups), which the appeals court had not ruled out.

Shares hit

RealNetworks, a media software firm, is one rival expected by some analysts to suffer from the ruling.

"Basically everything that is positive for Microsoft is negative for RealNetworks in our view," said David Bench of Arnhold & S Bleichroeder in New York.

RealNetworks stock fell $0.72, or 6.1%, to $11.04 following the decision.

A spokesman for the firm said the ruling has "no direct bearing on the continued success of [the company's] business".


The settlement

Appeal court ruling

Appeal hearing

Analysis
See also:

28 Jun 01 | Business
28 Jun 01 | Business
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