In a controversial deal generally seen as favourable to Microsoft, the US Justice Department yesterday settled its epic three-year antitrust case against the giant software company, without ordering any substantial changes in its business model.
Microsoft must still wait to see if the 18 states which took joint action with the Justice Department will agree to the settlement terms, while further legal arguments lie ahead in Brussels - when the company has to convince EU regulators in the coming weeks that it is not still anti-competitive.
District Court Judge Colleen Kollar-Kotelly, who had given the parties until yesterday to reach a deal, will rule on Tuesday on whether the settlement goes far enough to curtail Microsoft's monopoly.
Under the settlement with the Justice Department, Microsoft will provide rival software developers with information to allow them to develop competing products which would work with the software giant's Windows operating system.
The Seattle-based company will also allow a panel of three independent experts to reside on its premises and work full-time to ensure the software giant complies with the settlement terms. The restrictions will last five years and may be extended another two.
US Attorney General John Ashcroft said that the "strong, historic settlement" will "put an end to Microsoft's unlawful conduct and ensure that consumers will have more choices in meeting their needs in computers".
Microsoft chairman Bill Gates called it a "fair compromise" at the end of a legal marathon which has had "a profound effect on me personally". He refused to admit the company had violated antitrust law however, saying only that it had "acknowledged the importance of the concerns" expressed in court rulings that found it had broken the law.
Microsoft was charged with violating a 1994 consent decree forcing computer makers to sell its internet browser as a condition of installing its popular and dominant Windows operating software.
Last year, Judge Thomas Penfield Jackson ordered that the company be broken in two because of its monopolistic practises.
Microsoft became a major Republican Party contributor after the Clinton administration filed the case in 1998. The Bush administration took a break-up off the table before entering settlement talks some weeks ago.
Critics of the deal say it does not do enough to stop Microsoft from bundling new software applications into Windows or to force it to disclose enough of the operating system's inner workings.
"We couldn't be more satisfied," Justice Department anti-trust chief Charles James said after announcing the deal. "It gives complete freedom for computer manufacturers to replace Microsoft products without fear of economic disadvantage."
A core group of states including California, Connecticut, Ohio, Wisconsin and Massachusetts have reportedly said the deal might not adequately protect consumers - or competition.
Mr John Conyers of Michigan, the ranking Democrat on the House Judiciary Committee, suggested that the Justice Department's "inexplicable behaviour" was a result of political pressure.
In June, the appeals court threw out an order splitting Microsoft in two but upheld the central plank in the government case that Microsoft was a monopoly that had repeatedly violated antitrust law.
The court concluded that bundling the internet browser with Windows was unlawful if it was designed to protect the Windows monopoly. However, the settlement leaves intact the browser, instant message service and audio-video players, and makes no demand on Microsoft to remove any aspect of Windows.
Microsoft is not required to make major changes in its just-launched Windows XP software.
