States: No Decision On Appeal, But Further Fight Looks Unlikely

With that, the Microsoft antitrust case may be finally closed, after a five-year investigation, successful prosecution and remedies phase.

At a press conference here an hour after the decision was handed down on Friday afternoon, the attorneys general from Iowa, Connecticut, Utah, California and Massachusetts held a press conference and maintained they continue to "analyze and dissect" the court's 97-page opinion, but noted they are pleased with some of the changes the judge tacked on to the consent decree.

"We need to talk through it internally. No decision has been made on appeal," said Tom Miller, attorney general of Iowa who has led the antitrust charge against Microsoft for the past five years. "We haven't fully digested the opinion."

Bill Locklear, California's attorney general, said it's a mixed victory but added that the new consent decree and compliance regulations were no slap on the wrist. "This is the ninth federal judge appointment by four different presidents that concluded Microsoft broke the law," he said. "The debate is how much can the court do. The outcome is neither a total victory nor a total defeat."

Nevertheless, the tone of the attorneys general was far less fiery than their reaction following the announcement of the proposed consent decree between Microsoft and the U.S. Department of Justice last November, which was supported by nine other state attorneys general.

The attorneys general involved in the recent case said the court's willingness to adopt a broader, more strict compliance mechanism that holds Microsoft's directors accountable at the highest level was a significant addition to the consent decree.

They also noted that tweaks the judge made to the language of the consent decree, such as inserting the phrase "threat of retaliation" would prevent Microsoft from using strong-arm tactics in the future to force its will illegally.

They also said the judge took their advice and eliminated some OEM flexibility in automatic launching and boot sequences for Windows to address potential "loopholes" Microsoft could use to bypass the spirit of the consent decree. Several attorneys general had expressed concerns about potential loopholes when the proposed consent decree was announced last November.

"This decision is historic because it marks the first time the states have improved and achieved more than the federal government when we jointly sued under antitrust laws," said Richard Blumenthal, Connecticut attorney general. "It will impose accountability at highest levels of the corporation, independent directors, with the spirit and letter of remedies. And it rejected the paternalistic view so often expressed by Microsoft that it [the company knows better what consumers need or should want and can impose its vision. It sends the message that Microsoft will comply and prevent the kinds of threats and retaliation so powerfully documented at trial."

With that, it all but looks like the case is closed. Even so, Massachusetts Attorney General Tom O'Reilly warned Microsoft that he will be watching the company closely. "The final chapter has not yet been written," he said. "The court expects Microsoft will comply. It is an improvement, but we're not done yet."

Blumenthal noted that Microsoft would foot the tab for the states' litigation costs because it was found in violation of antitrust laws. "The cost of litigation will be borne by Microsoft because we are entitled to those costs and fees, and we will get them," he said.

Miller and Blumenthal said the most important aspect of the case should not be forgotten, that Microsoft was found to be in violation of sections I and II of the Sherman Antitrust Act and is being held liable for monopoly maintenance.

"Since we launched this case five years ago, there have been a huge number of changes [in the computer industry," Miller said.

"It sends the message to the Microsoft board of directors that it will beheld accountable to stop the kind of wrongdoing the court has found," Blumenthal said.

From Microsoft's headquarters in Redmond, Wash., Bill Gates, co-founder, chairman and chief software architect of the company, acknowledged that the antitrust case has changed his business. "We recognize we will be closely scrutinized by the government and our competitors," Gates said after the announcement.