Failure to Settle Only Clouds Microsoft Case

SAN MATEO (04/10/2000) - The hard-liners that prevented a settlement in the historic antitrust case against Microsoft Corp. did the software behemoth the biggest favor since the court battle began by allowing U.S. District Judge Thomas Penfield Jackson to make a ruling.

By appealing the verdict, which didn't find that the company violated the law in its hardball contractual arrangements, Microsoft can effectively focus this antitrust suit on the narrow issue of tying a browser to the OS, and not much more. That gives Microsoft a real good shot of winning this one on appeal.

Yet despite this potential win on the part of Microsoft, Jackson's ruling has brought years of Redmond resentment to the surface. Everyone wants to talk of breakup scenarios, which were considered far-fetched a year ago. Meanwhile, the provision of opening up Windows source code, something that developers say would bring higher quality and more competition to the marketplace, is fading as politics take the limelight.

Bad PR isn't the only thing dogging Microsoft's top brass. As our Page One story by Bob Trott and Jennifer Jones points out, Microsoft will have to convince the world that this ongoing appeal won't distract the company from its core business.

The antitrust yoke could hamper Microsoft's effectiveness in negotiating with partners and put any major strategic initiatives on ice.

The pundits are saying that this case will not dramatically affect doing business with Microsoft, as some companies may be spooked by the legal entanglements. Clearly, as time goes on, the business and technology basis for the case becomes increasingly irrelevant. But that doesn't mean some corporate IT managers won't take advantage of the situation in negotiating with Redmond.

By offering to make major concessions in the failed settlement negotiations, Microsoft has acknowledged its overbearing ways. A year or two from now, we'll know whether its legal gambit will pay off with more favorable terms, or none at all. Either way, the monopoly ruling has emboldened the industry and Microsoft's customers.

Is IT benefiting from this situation? Write to me at martin_la

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