Massachusetts, the sole remaining nonsettling state in Microsoft's epic US antitrust case, received a stinging legal defeat late yesterday when the US Court of Appeals for the District of Columbia Circuit shut down the state's appeal attempt. In a tersely worded ruling, the court rejected the state's argument that the Microsoft settlement didn't curb the software giant's voracious anticompetitive behavior.
"Massachusetts alone \[appealed\] the district court's ... decree," the ruling noted. "It \[argued that\] the district court abused its discretion in adopting several provisions Microsoft proposed while rejecting several others \[that\] Massachusetts and the other litigating states proposed. Massachusetts also \[challenged\] a number of the district court's findings of fact. Based upon the record before us ... and the record of the remedial proceedings following remand, we affirm the district court's remedial decree in its entirety. We uphold the district court's approval of the consent decree as being in the public interest."
Unless Massachusetts attempts a final appeal before the US Supreme Court, an event that legal experts agree is unlikely, this ruling effectively signals an end to Microsoft's US antitrust-related legal woes. The ruling also affirms that the company's weak settlement will remain unchallenged.
The appellate court ruling contains some interesting clauses, however. For example, the court reinforced a lower court ruling that Microsoft's bundling of Microsoft Internet Explorer (IE) with Windows was harmful to consumers, although the court decided that the current solution to that problem--a feature in recent Windows XP releases that lets computer makers, IT administrations, and end users hide IE in favor of another Web browser--is sufficient and that Microsoft doesn't need to physically remove IE from Windows. Massachusetts had correctly argued that hiding IE wasn't enough because the IE code still remains on the system.
Massachusetts Attorney General Tom Reilly, who spearheaded the expensive battle with Microsoft, expressed dismay at the outcome. "This decision is bad news for consumers, bad news for competition, and ultimately will be bad news for our economy," he said in a statement issued late yesterday. "This clearly shows that our antitrust laws are not effective in protecting consumers. Our high-tech economy will not reach its full potential unless regulators and the courts are willing to deal with Microsoft and its predatory practices."
At Microsoft, predictably, people met the decision with relief, and the company is now free to announce how it will spend its massive $55 billion cash hoard now that its final major legal struggle is over. "Of all the steps we've taken over the past 2 years, this is the most important step in resolving our legal issues and moving forward," Microsoft Senior Vice President, General Counsel, and Corporate Secretary Bradford L. Smith said. "Today's unanimous decision sends a clear and emphatic message that the settlement reached 2 years ago is a fair and appropriate resolution of these issues. We remain 100 percent committed to fulfilling our obligations under the settlement and earning the trust of our customers and the industry."