The settlement protects a range of software products that could potentially threaten Microsoft's operating system monopoly. Such products include browsers, media players and instant messaging products.
As part of the agreement, Microsoft will be required to disclose its middleware interfaces or application programming interfaces.
Equal OS The agreement also offers protection for PC manufacturers. It requires Microsoft to license its operating system to PC makers on "uniform terms" for five years.
The states have until tomorrow morning to decide whether to join the settlement reached this week, said District Judge Colleen Kollar-Kotelly at a status hearing.
The attorneys general from New York, Connecticut and Iowa, speaking after the hearing, all said the agreement represents progress. But they said they wouldn't commit to backing it until they have studied it further.
Nonetheless, the state officials said their desire for a settlement will be weighed against its potential benefits to the economy – and the technology industry in particular.
Settlement scenarios If the states don't agree, a remedy phase will begin in the proceedings. Even so, the court could still accept the federal settlement and begin a Tunney Act proceeding, which requires the court to collect public comment about an antitrust settlement for 60 days. The judge must then decide, after reviewing those comments and the government's response to them, whether the agreement is in the public interest.
The government, however, faces a potentially tough job selling the proposal to the high-tech industry, particularly those companies that operate under the cloud of Microsoft's operating-system dominance. Technology industry groups that have supported the government's case until now say the agreement won't impact Microsoft's strategy of integrating more features into its browser, squeezing out other companies.
Charles James, the Justice Department's antitrust division chief, said the government "couldn't be more satisfied" with the consent decree, which imposes a number of restrictions on Microsoft's business practices for five years.
PC freedom James said the agreement will bring significant change to Microsoft's business practices, adding that it will give computer makers "complete freedom" to replace Microsoft's middleware products with their own without fear of retaliation. In particular, he cited the "tough enforcement" provision of the agreement, which calls for a panel of three independent, on-site, full-time computer experts.
Another provision that officials point to as significant, and proof that the agreement will concern future product development, is a section intended to keep competition in the server market. The settlement ensures that non-Microsoft server software can interoperate with Windows on a PC the same way that Microsoft servers do.
Pleased John Warden, Microsoft's lead trial counsel, told the judge that the company "is very pleased with the report we are able to give to the court today".
Warden added: "The settlement is good for the parties and consumers. It's good because it puts the conflict to an end on a basis consistent with the Court of Appeals ruling."
State officials have already scheduled a series of conference calls during the next several days to review the settlement. Citing the sovereignty of the states, Sullivan said: "There is no shortcut to this process."