Little new in Microsoft settlement

Judge Colleen Kollar-Kotelly must review the settlement

Kevin Anderson BBC News Online Washington correspondent

Microsoft and the US Department of Justice responded to critics of a proposed anti-trust settlement by revising their proposal and answering some of the thousands of comments made criticising the plan.

Judge Colleen Kollar-Kotelly will begin reviewing the plan next week.

Legal and industry experts say the changes are minor clarifications, but an analyst who follows the company closely says he believes that Microsoft and the government will win approval for the settlement.

However, the analyst also believes that some of the company's greatest anti-trust challenges lie ahead.

Refinements

"The modifications announced today simply make this effective settlement even better," said Charles James, head of the US Department of Justice anti-trust division.

In the revised settlement, Microsoft agreed to delete a provision that some computer makers, including Sony, thought could be used by the software company to take their intellectual property.

The changes also clarified language designed to give computer makers more freedom in featuring software from Microsoft rivals.

And the changes also expanded the type of technical information that Microsoft would share with competitors to allow their software to work with Microsoft's server software.

Criticism continues

But at least one anti-trust lawyer said there was little to the changes.

"This is a non-event. I wouldn't even call this a Band-Aid," said Mark Ostrau, head of anti-trust practice with the law firm Fenwick and West.

He also said the revisions did little to respond to the intellectual property concerns of computer makers.

The settlement forces Microsoft to have a uniform license for Windows because trustbusters feared that the software company could use preferential licensing terms to force computer makers to use on Microsoft software.

But some computer makers such as Sony, which uses specialised audio and video software in its computers, negotiated terms with Microsoft to protect its proprietary software.

Most of the changes are moving words around without substance

Mark Ostrau, head of anti-trust Fenwick and West

Mr Ostrau said that instead of raising the baseline of its licensing agreement with computer makers, the proposed settlement weakens the licensing terms for some computer makers such as Sony.

And he said that the changes do little to address detractors' concerns.

He said it is as if Microsoft looked at the some 12,000 comments criticising the proposal and said, "I'm going to move this comma. Are you satisfied?"

And indeed, the nine states that have refused to sign on the settlement also criticised the changes.

"The revisions don't change the fundamental nature of the settlement -- nor the fundamental flaws so many have found in it," said Iowa Attorney General Tom Miller.

The revisions did not include any of the remedies that the dissenting states have suggested such as forcing the company ship a Java virtual machine, to sell a stripped down version of Windows or to reveal more about the inner workings of Windows or Microsoft's popular Office suite of business applications.

Pushing for a settlement

Matt Rosoff, an analyst with the consultancy Directions of Microsoft, agreed that the changes were minor.

"Most of (the changes) close up perceived loopholes made by people who objected to settlement," he said, adding that it finely parsed the terminology.

He said that some companies were worried that Microsoft was trying to write loopholes into the settlement that it could later exploit, and some of that concern was understandable considering Microsoft's past behaviour with its partners.

But he said that Microsoft wants a settlement.

"This has done so much harm to Microsoft's reputation and so much more harm with partners, potential partners, privacy advocates and media. It wants to put anti-trust issues behind them," he said.

And he said that he believes that Microsoft and the government stand a good chance of winning approval for the settlement.

Far from over

But Mr Rosoff says that anti-trust battles will trouble Microsoft for the foreseeable future.

Mr Rosoff believes the states will be unsuccessful in imposing restrictions on Windows XP

He does not believe that the dissenting states will have much success in trying to impose restrictions on Microsoft's Windows XP, the newest version of its flagship operating system.

But, he does see a real threat from the civil anti-trust suit filed by AOL Time Warner.

He said that AOL's lawyers had done an excellent job of reviewing the Appeals Court's objections to the government's case and addressed those concerns.

"I think that is going to be thorn in MS side for year's to come," he said, adding, "Their legal team has good job security."