One of the most important provisions of the antitrust settlement negotiated with Microsoft Corp. is falling short of the federal government's hopes that it would energize rivals of the world's largest software maker, the Justice Department acknowledged Friday.The issue here is that Microsoft's competitors don't wish to license Microsoft software. Yet under the aegis of its antitrust settlement with Microsoft, the government is now holding Microsoft to an impossible standard: Microsoft's competitors must license Microsoft's software, and Microsoft must do whatever it takes to secure those licenses.
U.S. antitrust lawyers told the trial judge they are increasingly uneasy that efforts to persuade competitors to license Microsoft's Windows technology for their own software products "are not likely to spur the emergence in the marketplace of broad competitors to the Windows desktop."
The landmark antitrust settlement compels Microsoft to offer its technology to competitors to build products that seamlessly communicate with computers running Windows software. When the settlement was negotiated, the judge and government lawyers described that requirement as among its most significant provisions toward restoring competition in the technology industry.
Government lawyers told U.S. District Judge Colleen Kollar-Kotelly in court papers that Microsoft's licensing agreements have turned out too complex and potentially too expensive for competitors.
The Justice Department said Microsoft has agreed to change the agreements. But even after changes are made, government lawyers warned, Microsoft "cannot foresee with confidence that the improvements will be sufficient and remove the need for further changes."
Microsoft said it will lower prices and make agreements as attractive as possible for its business rivals, but it argued that it shouldn't be held responsible if competitors choose not to use its Windows technology for their products.
Unsatisfied that the license offers were effective enough, the trial judge urged government lawyers in October to investigate why only nine companies had paid Microsoft for licenses. The government said Friday that number has climbed to 11, and Microsoft said it was negotiating with 20 more. [AP]
Under terms such as these, Microsoft has lost the right to its property. It may own its software products in a nominal sense, but in reality, its property only exists to serve the interests of others.
And it is this destruction of property rights that makes antitrust the "Magna Charta of free enterprise."