New Mexico breaks ranks on Microsoft

The US state of New Mexico has unexpectedly withdrawn from the antitrust action against US computer software giant Microsoft.

The move, announced late on Thursday, came a day after Microsoft said it would revamp its next-generation Windows operating system to make it easier for rival companies' products to compete.

I was encouraged that Microsoft made some concessions ... that was a very good first step

Patricia Madrid
New Mexico attorney general

New Mexico attorney-general Patricia Madrid said that Microsoft's concessions and the cost of continued legal actions had influenced her decision.

New Mexico's withdrawal may provide the impetus for more out-of-court deals.

Analysts said Microsoft was now trying hard to divide the coalition of states opposing it.

Strategic move

"It is a very interesting strategic move by Microsoft to... try to... break up the state coalition by offering to settle," said Andy Gavil, a law professor at Howard University.

"It suggests that Microsoft has got a strategy afoot to try to placate the states by offering to pay attorney's fees."

But Iowa's attorney general, a leader in the fight, said he would press on with the case.

"We have the resources and the will to proceed" without New Mexico, Iowa Attorney General Tom Miller said.

First withdrawal since 1998

Under the settlement with New Mexico, Microsoft will pay the state's legal costs, and New Mexico will share in the effects of any eventual ruling in the case.

My job is to do what I think best serves the interests of New Mexico consumers and businesses

Patricia Madrid

New Mexico was one of 18 US states which, along with the US federal government, have been involved in a four-year court battle with the company.

It became the first state to withdraw from the action since South Carolina in 1998.

Ms Madrid said she was "encouraged" by Microsoft's concessions, and described them as "a very good first step".

"My job is to do what I think best serves the interests of New Mexico consumers and businesses," she added. "I don't see the upside for having my state expending resources in a case of this magnitude," she said.

A Microsoft spokesman said that the company "was pleased to have this matter resolved".

The US Department of Justice declined to comment on New Mexico's decision.

Change in desktop

Wednesday's decision by Microsoft should mark an end to the practice of requiring computer manufacturers to display its products such as Internet Explorer on the desktops - or display screen - of new computers.

We are providing computer manufacturers with greater flexibility

Microsoft statement

"We recognise that some provisions in our existing Windows licences have been ruled improper by the court," Microsoft said in a written statement.

"So we are providing computer manufacturers with greater flexibility", and doing so immediately, it said.

The move is a 180-degree reversal from previous mandates by Microsoft. In the past, personal-computer (PC) makers, such as Compaq, Dell and Gateway were required to install programs such as Microsoft's Internet Explorer internet browser on computers alongside its ubiquitous Windows operating system.

But some analysts, such as Jonathan Geurkink of Ragen McKenzie in Seattle, said the change was largely cosmetic.

"On the public relations front it helps them in the sense that it shows them being deferential to the court," he told the Associated Press news agency.

But he said he saw little benefit for users or competitors.