Microsoft gets victory as judge OKs settlement

WASHINGTON -- A federal judge on Friday accepted nearly all the provisions of an antitrust settlement between Microsoft Corp. and the Justice Department, but warned top company executives that she will hold them individually responsible for complying with her instructions.

In an enormous victory for Microsoft and founder Bill Gates, U.S. District Judge Colleen Kollar-Kotelly rebuffed arguments by nine states and the District of Columbia that tougher sanctions were essential to restore competition in the computer industry.

She concluded that some penalties proposed by those states would chiefly benefit the company's rivals. She made a few minor changes to the settlement that require acceptance by Microsoft and the Justice Department.

The original trial judge had ordered Microsoft split into two parts, touching off two years of wrangling. Friday's result was far more favorable to Microsoft, which helped fuel the computer revolution of the 1990s.

Gates said he was "personally committed" to abide by the agreement, which he called "a good compromise and good settlement." He said Microsoft was unlikely to challenge the decision.

"This settlement puts new responsibilities on Microsoft, and we accept them," Gates said, adding: "At this point, we're not seeing anything that would be cause for appeal, but we need to make a full assessment."

His corporate partner, Chief Executive Steve Ballmer, struck a conciliatory tone toward Microsoft's behavior toward rivals. He said the company has "learned and grown through the experience of the last four years. We are committed to moving forward as a responsible leader in an industry that is constantly, constantly changing."

Attorney General John Ashcroft called the decision "a major victory for consumers and businesses."

Room for competition

The decision gives consumers more choices. It allows Microsoft rivals more flexibility to offer competing software features on computers running Windows. Microsoft has already enacted terms of the settlement, and now allows users of its latest Windows versions to replace some built-in features, such as instant-messaging or music players, with those from competitors.

While rejecting the states' arguments, the judge acknowledged that Microsoft has a "frustrating" tendency not to admit its illegal corporate conduct. She warned Microsoft, the world's largest software company, that she will demand that its directors, especially Gates, enforce the settlement provisions.

"Let it not be said of Microsoft that 'a prince never lacks legitimate reasons to break his promise,' for the court will exercise its full panoply of powers to ensure that the letter and spirit of the remedial decree is carried out," the judge wrote, quoting Renaissance philosopher Niccolo Machiavelli, an exponent of expediency.

Appeals by the states were likely, although state officials said they were still studying their options. They noted that Microsoft is obliged to pay their legal fees.

"We've got plenty of fight," Iowa Attorney General Tom Miller said. "We haven't lost it at all. We need to talk to our colleagues, analyze it more and make a decision."

Miller and his colleagues concentrated on the few changes the judge made to the U.S. settlement that respond to criticisms the states raised. Kollar-Kotelly required Microsoft to disclose some technology to its rivals months earlier than the company and government had agreed.

She also eliminated a technical committee that would have enforced the settlement terms. In its place, a corporate committee -- consisting of board members who aren't Microsoft employees -- will make sure the company lives up to the deal. The judge also gave herself more oversight authority.

Microsoft and the government had argued that the settlement they secretly crafted one year ago was sufficient.