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MS settlement nears

Gate’s comment brings recent Microsoft actions into focus.

As my many recent comments regarding Microsoft’s monopoly suggest, I’m really puzzled by the company’s actions this past year. Aside from an appeal right after a brutal loss in court at the hands of Judge Thomas Penfield Jackson, Microsoft did exactly what the ruling said it couldn’t do on a number of fronts in a number of product lines. In the process, Microsoft appeared to simply thumb its nose at the whole process and move along as though no consequences would follow from the monopoly verdict. What puzzled me is that I thought this strategy would hinder its chances at avoiding a break-up.

Now that its appeal has been mostly successful, its actions make more sense. In fact, from a purely utilitarian perspective, the actions are brilliant. I imagine Bill Gates on the heels of Jackson’s ruling contemplating what could be done. “Disregard the facts of the case and move forward on my original plan. If we lose on appeal, we will be all the stronger when ordered to break up, so we’ll have two huge companies. If we win on appeal, then we can settle and basically be in the position we wanted to be in. Either way we’ll be stronger if we accelerate our product development and all that it entails.”

In a news story on our site today, Gates seems to be following the second conditional of his original plan. Having won the appeal, the company will move to settle, and be on its merry way with very little damage done.

The appellate court’s ruling was not a home run for Microsoft, however. As several analysts predicted, the court upheld amended versions of two out of the three parts of Jackson’s ruling. Most importantly it ruled that Microsoft did use its monopoly in anticompetitive ways. But it overturned the break-up ruling and sent the case back to another District Court judge to determine the ultimate penalty or to facilitate a settlement.

Several parties to the prosecution, including Attorney General Ashcroft and attorneys general of several states, also claim victory and show an eagerness to settle. So signs are good a settlement will come by the end of this year. What that settlement will look like is anyone’s guess. But, by the time it is finalized, Microsoft will have cemented its market share and used its monopoly to grab the lion’s share of Internet real estate. And antitrust will just be a bump in the Road Ahead, laid out by Gates in the book of that name in 1997–a road that leads to Microsoft’s ownership of the desktop and the Internet.

James Mathewson is editorial director of ComputerUser magazine and

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