US government soft on Microsoft?

Microsoft's domination among PCs is likely to continue

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

In the coming days and weeks, the US government is going to have to answer to a host of critics as to whether it went soft on Microsoft in settling its landmark antitrust suit on Friday.

Friday's settlement amounts to a coup for Mr Gates

After spending millions of taxpayer dollars prosecuting a case against the mammoth software maker, the Justice Department walked away, telling Microsoft it will be merely looking over the software firm's shoulder.

It's a B-movie ending to a case that's akin to a small-town sheriff saying "I'll be keeping my eye on you" to the suspect he nabbed but had to let go because of insufficient evidence.

It represents quite a climb-down from the government's previous position that Microsoft was the Darth Vader of the technology industry and should be split in two to prevent it from employing its predatory practices.

Inevitable ending

Chief among the government's goals was one to prevent Microsoft from bundling its products, an objective at the heart of the Justice Department's case for the last four years - and one it conceded on Friday.

And yet Friday's agreement between the previously warring parties was all but inevitable given the events in the case over the last nine months.

First there was the change in administrations in January, from President Clinton's hawkish, antitrust Justice Department to George W Bush's more pro-business law agency, headed up by conservative John Ashcroft.

The government's portrayal of Microsoft as an evil empire is over

Then in late June, the US Court of Appeals reversed a previous ruling break-up of Microsoft - proposed by the now discredited Judge Thomas Penfield Jackson - which would have split the giant firm in two.

The court also found that Microsoft did not use its monopoly power to corner the internet browser market.

The court did not, however, overturn findings that Microsoft strong-armed the competition within the computer operating system market, where it holds a near monopoly, leaving Microsoft critics to hope that some sort of retribution might be exacted on the Redmond, Washington-based firm.

The other shoe falls

But it was a decision by the Justice Department in early September to no longer seek a break-up of the company that revealed its hand and the probable outcome of the case: Microsoft would largely continue as it had.

To be sure, some of the issues discussed in Friday's settlement agreement are moot. For example, allowing PC makers to put other icons on the desktop is not a big deal. Microsoft agreed to let computer manufacturers do just that in July.

Also, certain exclusivity agreements between PC makers and Microsoft are not an issue, since every computer manufacturer now wants in-demand Windows software on its machines.

One observer noted Microsoft's efforts to enforce these exclusive agreements were akin to the software firm aggressively trying to keep a prisoner in a cell he did not want to leave.

Still there are those who think Microsoft should have paid some sort of price for its bullying ways, such as a token penalty (maybe a billion dollars or two) or an admittance of guilt would have been nice.

But, given the absence of even that mild punishment, Microsoft executives, chief among them Bill Gates, have nothing but smiles over Friday's events.