Microsoft settled a broad antitrust dispute with the Justice Department over the weekend, but it won't soon dent its status as the world's most powerful software company.
But over time, the accord could create more choice for personal computer shoppers.
"Microsoft is an American success story, but there is no excuse for . . . (trying) to cement its success through unlawful means," says Assistant Attorney General Anne Bingaman.
For Microsoft, "the worst case would have been a breakup of the company," says Bill Whitlow, analyst at Pacific Crest Securities. "This is better than expected."
Microsoft, which had revenue of $3.8 billion last year, agreed to alter practices related to its Windows-DOS operating-systems software, which controls basic functions of PCs.
The settlement bans a Microsoft sales technique, which can result in PC makers paying royalties to Microsoft even if they sell PCs with non-Microsoft operating-system software. PC makers who agree to this get steep Microsoft discounts. Competitors say this prevents PC makers from using rivals' software because they don't want to pay two royalties.
The result: More operating systems may hit the market if the likes of Novell, IBM, Taligent and Sun Microsystems persuade PC makers to use their software. "Now, we'll be able to compete on price and functionality," says David Bradford, Novell senior vice president. That could help them cut into Microsoft's 80% share of the market.
The settlement also requires Microsoft to weaken the restrictions it imposes on other software developers' employees, who see sensitive information as they harness their programs to Windows-DOS. Under the settlement, the time during which such employees will be barred from working on other projects will be shorter.
The settlement, however, didn't settle key industry accusations against Microsoft, including whether its units that create computer programs have unfair advantages because the company also controls the Windows-DOS operating systems that run those programs. Still, Bradford says that the accord "is a necessary step" toward creating a level playing field.
The agreement ends three years of investigation by the Federal Trade Commission and one year by the Justice Department.
