DoJ to cut MS ‘sellout’ deal without States' blessing?

Ritual ordure-pelting won't stop this one...

As the cries of 'sellout' over the DoJ's proposed antitrust settlement with Microsoft grow louder, it looks increasingly likely that the 18 US States that have been party to the action will refuse to sign up for the deal, and peel off.

The judge's deadline for a negotiated deal falls today, 2nd November, but the most the States will do will be to ask for an extension, so they can consider the offer further.

One of the more significant pieces of news to leak out of the process in the past couple of days was that: "All references to plaintiffs in court documents will be changed from the plural to the singular to reflect the altered status of the case," according to a Bloomberg report.

Changes of this sort would reflect an MS-DoJ deal that left the States to do their own thing, so if the report is correct then the DoJ has already decided that the States won't be coming along, but that it should still cut its own deal and get the hell out of the kitchen.

That would be a pretty despicable thing to do to the people who've been at least theoretically fighting on the same side as you for the past few years, even if you don't take into account the largely negative reactions the proposed deal has been getting. The people who do like it are of course the analysts, who strangely enough feel that it won't damage Microsoft's operations at all. As Thomas Weisel Partners tellingly concludes: "a major win; no substantive change in business model or R&D practices; maintain Buy."

The critics agree, sort of. The Consumer Federation of America, Consumers Union and the Media Access Project coalition (get yourselves a snappy acronym people, will you?) said in a statement yesterday:

"It is outrageous that the federal government, armed with a 7-0 decision by the U.S. Court of Appeals that Microsoft illegally quashed rival software makers, would decide to settle in this fashion. The reported settlement fails to address the fundamental issue of Microsoft's efforts to mingle its code with its software applications... The potential for Microsoft to continue to misbehave under this reported arrangement is enormous. If the government does not push for a substantial penalty should Microsoft continue to behave in an anticompetitive manner, Microsoft is likely to continue to break the law in the future.

"If there were at least some semblance of a reasonable legal framework in place, the presiding judge could fill in the loopholes and fix the problems. But this framework appears to be fundamentally flawed. Given the problems with this framework, we would urge the state attorneys general to reject this deal and continue to litigate in order to ensure that the Windows XP program is both convenient to consumers and functioning in an open and competitive market."

Which just about sums it up. Computer & Communications Industry Association CEO Ed Black described the deal as capitulation, and said the deal was weaker than could have been obtained before the trial started (which surely cannot be true, unless there are some really big loopholes in there).

"Microsoft has been declared an illegal monopolist by nine Federal judges," he said, "including one who determined it was necessary to break up the company. They should be held accountable for their unlawful actions, and prevented from further abusing their monopoly position. The provisions of the proposed settlement are an invitation to further abuse. Microsoft will be free to continue their illegal practices, only now the Justice Department will have been complicit in this activity."

But the heaping of ordure probably won't stop the DoJ, which will leave the States to pursue the action on their own. If they do, they'll surely take a more hawkish attitude, but Microsoft will probably find them easier to handle. They have fewer resources, and it should be possible for the company to induce at least some of them to peel off, as indeed has happened already. Onwards to an inglorious ending? ®

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