Thursday, April 28, 2011

Go and Sin No More: DOJ Oversight of Microsoft Ending

Microsoft Relevant Products/Services won't be under a microscope any more come May -- at least not from the Department of Justice. The software Relevant Products/Services giant has been dealing with regulators for 13 years, after the DOJ filed an antitrust lawsuit.

The DOJ accused Microsoft of using its market heft to roll over competitors. Words like monopoly were used. But judges in the case seem ready to allow that oversight to end, and the DOJ will stop scrutinizing Microsoft's moves as of May 12.

"And so May 12 will close an important chapter in the history of antitrust law," said Judge Colleen Kollar-Kotelly during the last oversight hearing on Wednesday at the U.S. District Court for the District of Columbia, according to Reuters.

Antitrust History

The DOJ and attorneys general for 19 states plus the District of Columbia filed suit against Microsoft in 1998 claiming violations of antitrust laws.

After discussions ordered by the federal court, Microsoft reached a settlement -- often referred to as the consent decree -- with the DOJ in 2001. Nine states joined in that agreement while seven others continued to pursue their claims separately before accepting the District Court's final judgment in 2002. One state appealed the ruling, but it was upheld in 2004 by the U.S. Court of Appeals.

Following the antitrust action, Microsoft faced a number of class-action lawsuits. But unlike the government case, which alleged that Microsoft used its market position to harm competition by incorporating new features into the Windows operating systems at no additional cost, the private class-action suits claimed Microsoft overcharged consumers.

A More Competitive Microsoft?

It was a nightmare for Microsoft that few in the technology industry will soon forget. But now that it appears to be over, or at least almost over, the market may see a bolder Microsoft. Indeed, the expiration of DOJ oversight will allow the software giant more freedom to compete, according to Rob Enderle, principal analyst at the Enderle Group.

"Any type of consent decree like the one that was over IBM and the one that is over Microsoft limits significantly a company's ability to move," Enderle said. "They have to always be worried that something they are doing or considering or strategizing is going to cross the line or get them in trouble by the folks providing the oversight. The fear of that can tie a company up badly."

As Enderle sees it, Microsoft could not enter into certain discussions or follow certain paths for fear it might offend the DOJ. Just the fear that the DOJ is looking over your shoulder makes it easy to consider almost any move controversial, he said.

"If a manager doesn't like an idea because it wasn't their idea, they can raise this specter of regulatory oversight and be very effective at killing it," Enderle said. "That just ties the company up. It changes the company from a firm that's run by product managers to a firm that's run by attorneys. Not only is that not a great place to work, it also makes a firm overly rigid. It doesn't allow it to bring its A game."

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