Microsoft decision heralds Bush stance

DoJ decision all but assures Microsoft will remain intact

By BBC News Online's North America business reporter, David Schepp

From the moment George W Bush was deemed the winner of the controversial 2000 presidential election, it was rumoured that the rules surrounding Microsoft would change.

Up until that point, the US Department of Justice (DoJ) had been unrelenting in its pursuit of the world's largest software maker and sought to have the company's monopoly on computer-operating systems broken up.

US vs Microsoft Timeline

1990: US first investigates Microsoft

1992: DoJ takes over investigation

1997: DoJ seeks $1m-a-day fine against Microsoft

1998: States join government in anti-trust action

1999: Judge finds Microsoft has monopoly power

2000: Court rules Microsoft in violation of antitrust laws; break-up ordered

2001: Appeals court reverses break-up decision; DoJ pulls plug on break-up efforts

DoJ officials got their wish in June 2000, when a district court judge ordered Microsoft to be split in two.

Efforts undone

But years of effort by the previous Clinton administration as well as taxpayer expense were undone on Thursday after Bush administration justice officials said they would not seek to have Microsoft bisected.

"The change to a more pro-business Bush administration made a break-up unlikely," said Brendan Barnicle, an analyst at Pacific Crest Securities.

"The reality of a settlement becomes more likely without the threat of a break-up hanging over the company's head."

The DoJ said it is pursuing the tack of having Microsoft broken up and, rather, seeks a quick remedy in the antitrust case.

Instead, justice officials said, they are seeking to ban Microsoft from threatening or intimidating personal-computer (PC) manufacturers and require the software maker to make available its source code for outside developers.

Different tack

DoJ did not simply abandon its desire to have the company broken up.

The agency has also relented on its assertion that Microsoft's inclusion of its Internet Explorer web browser amounted to an unfair trade practice.

That Microsoft unfairly tied its Internet Explorer web browser into its Windows operation system was the original complaint of the DoJ.

Plans to bundle instant messaging in the new Windows XP have aroused concern

Another analysts said Thursday's decision by DoJ officials is an affirmation of a June court ruling, when the US Court of Appeals reaffirmed that Microsoft had indeed used its monopoly power in marketing its Windows operating system.

"[Thursday's decision] reinforces what happened earlier in the summer," said Paul La Monica, investor news editor at Red Herring magazine.

"The key now going forward for Microsoft will if it needs to settle with the DoJ in regards to the assertion that it [engaged] in monopolistic practices on the operating-system side," Mr La Monica told BBC News Online.

He added that some US states' governments still have cases outstanding against the firm.

Eighteen state attorney generals stepped forward to support the DoJ decision on Thursday, saying it was the quickest way to a settlement.

"Since the court of appeals decision, the states and the Department of Justice have directed their efforts to one objective, the quickest and most effective remedy possible," Iowa Attorney General Tom Miller said in a statement.

A nicer Microsoft?

Critics of the Justice department have said the government's efforts in recent years have had little effect on Microsoft's business conduct.

However, others see the threat of a break-up as reason for Microsoft sounding a more conciliatory tone in recent months.

In the wake of the June ruling, which both affirmed the finding that Microsoft engaged in antitrust activity and reversed the break-up order, the software giant was seen taking a softer line in its dealings with PC manufacturers.

In July, Microsoft seemingly offered an olive branch to PC manufacturers when it said it would no longer place restrictions on what icons PC makers place on computer desktops on its latest version of its operating system, called Windows XP.

DoJ and Microsoft lawyers are set on 21 September to attend a hearing before district judge Colleen Kollar-Kotelly to consider scheduling further proceedings.

Most analysts say, however, it is too late for the court to act against Windows XP.

Microsoft has signed off on the product and sent it off to manufacturers for installation on new computers for the 25 October launch date.