Members Of Microsoft Antitrust Compliance Committee Appointed

As stipulated by U.S. District Court Judge Colleen Kollar-Kotelly in her Nov 1 ruling, all three are current members of Microsoft's board of directors.

Late last Friday, Microsoft announced the appointment of Harvard Business School professor Dr. James Cash, Merck Chairman, CEO and President Raymond Gilmartin and former U.S. Secretary of Labor Ann McLaughlin Korologos to the new committee, which will oversee concerns that arise about Microsoft's adherence to the settlement.

Microsoft and the Department of Justice did not return phone calls seeking comment.

Cash, who was named to Microsoft's board of directors in June 2001, will serve as chairman of the committee. Gilmartin has been a Microsoft board member since May 2001. Korologos, currently senior adviser at Benedetto, Garland and Co., was named to Microsoft board of directors in January 2000.

The consent decree called for the establishment of the committee within 30 days of entry of the final judgment. Last Friday, the U.S. Department of Justice submitted a third revised proposed final judgment that included changes of language insisted by the nine settling states. The nine nonsettling states that brought a civil case against Microsoft urging harsher remedies than those contained in the consent decree have not yet decided whether to appeal the court's Nov.1 decision, though that appears unlikely.

While the judge insisted on the appointment of Microsoft board members to ensure accountability at the highest levels of the software giant, some raised concerns about the impartiality of a committee that has current ties to the software giant and potential conflict of interest going forward.

As reported by CRN last week, Sun Microsystems, members of the Linux community and industry watchdog ProComp have already registered complaints alleging Microsoft's noncompliance with the spirit and intent of the consent decree.

Sun has expressed concerns over the company's communications protocol licensing terms. Other Linux developers say the licensing terms for other Microsoft protocols made available as part of the proposed consent decree make them unusable because those terms would violate the General Public License endorsed by the open source community. Sources at Microsoft acknowledge this may be the case but that Microsoft has the right to charge royalties for its intellectual property.

However, one open source developer working on Samba -- a popular Linux file and print server designed to compete with the Windows servers, claims the antitrust settlement is not intended to alleviate competitive concerns. "This whole thing is a shell game perpetrated on the Department of Justice to allow them to save face while allowing Microsoft to explicitly discriminate against their only competitor, the Open Source/Free Software movement," said Jeremy Allison, a lead developer on the Samba Project.

"There are obvious conflict tensions with the compliance committee's composition, but this judge wasn't concerned about potential conflicts because the committee is not intended to be the main enforcement mechanism for the judge," said Hillard Sterling, an antitrust attorney with Much, Shelist, Freed, Denenberg, Ament and Rubenstein in Chicago. "Instead, the court will enforce the decree, with the former plaintiffs serving the principal function of reporting potential violations."

He added that the plaintiffs are somewhat responsible for Microsoft's control over the compliance committee because they criticized the proposed technical committee, which the judge agreed to reject. "But the judge threw out the baby with the bathwater, structuring instead a compliance committee that had even less incentive to be aggressive against Microsoft's interests," Sterling said.

In print, the consent decree holds all Microsoft officers, directors, agents, employees, subsidiaries and successors accountable for adhering to the provisions of the consent decree.

Sun voiced its objections to the committee makeup shortly after the judge's ruling was issued on Nov. 1.

"The weak steps that Microsoft has taken to comply with the requirements already show that the settlement will be ineffective in curbing Microsoft's monopolistic and anticompetitive practices and how difficult it will be to enforce, quite apart from the propriety of having Microsoft's own board members be the first line of compliance enforcement," according to a statement issued by Sun special counsel Michael Morris following the Nov. 1 decision. "We will also continue to pursue our civil case and to cooperate with the European Commission's case against Microsoft to ensure that the company does not continue to use its monopoly position to become the gatekeeper of the Internet."

While the European Commission is expected to issue a ruling on its own Microsoft antitrust case by year's end, many believe the settlement in the United States will be rigorously tried and tested by rivals and other concerned parties. However, the effectiveness of the compliance committee remains a big question.

One industry observer said it's too early to judge whether or not the compliance committee will be effective. "It really depends upon who is on the three-member panel and how strong the personalities are," said Oli Thordarson, president of Alvaka Networks, Huntington Beach, Calif. "How good is the solution? Only time will tell. My guess is it will serve more for show and Microsoft has had its hand slapped, so it will be more cautious and exercise more PR spin over future efforts."