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A Step Closer To The End

By taking a breakup of Microsoft off the table, the Justice Department and the states are signaling that they are willing to settle for less sooner, rather than more later, from the company. The announcement reduces the stakes for Microsoft Corp., but also dramatically increases the chances the company will be given a significant "conduct" remedy once the shouting dies down.

From a political point of view, it isn't hard to reason that the feds decided to lay off Microsoft in this fashion because the Bush Administration is much more sympathetic to big business than was its predecessor. And certainly this news is a sign that the Justice Department looks very differently upon Microsoft's actions than did the Clinton Justice Department. Many political, legal and business analysts predicted that this would happen once John Ashcroft took the reins and, for a change, the talking heads were right.

But legally the move makes some degree of sense as well, depending upon how the feds and the states evaluate their chances of ever seeing a breakup anyway. It all but assures the Microsoft case will be resolved sooner rather than later and that the company will be punished in a way which either will be sanctioned by the federal courts or at least not interfered with by those courts. In that sense, and if you are generally in favor of business certainty and finality, this is good news.

If the government decided that a break-up wasn't in the cards anyway - a reasonable conclusion based upon how dramatic a remedy that would be - they are better off discounting it now and focusing instead on practical remedies which have some hope of being approved by the courts. The move will speed up the remedy hearing drastically. It will make it less complicated and it will encourage the new federal judge presiding over it, U.S. District Judge Colleen Kollar-Kotelly, to push the parties to settle it.

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And although at first glance it seems to be wonderful news for Microsoft, it also puts some added pressure on the company to give a little more when it comes to those settlement talks. Now the company can no longer justify a scorched-earth defense where it fights tooth-and-nail in order to save its hide. Now that its hide no longer is at stake, the company has to bargain seriously with the other parties on real "conduct" remedies which will affect how the company operates.

There is one aspect to the development which surprises me, however. I'm a little surprised that the Justice Department would announce its new strategy so publicly. I suppose the feds had to do so because of its obligations to the courts but, still, one would imagine that Justice could have done more with this as a bargaining tool if it remained private - a secret carrot if you will - and discussed such a move only in discrete in talks with Microsoft. Now that the breakup is off the table, the government loses it as a bargaining tool.

So the case continues. The lawyers will keep talking. Te judge soon will get everyone together to talk about scheduling and witnesses and the like. But the end is in sight. Instead of years, it may only be a matter of months before we no longer have to hear about United States v. Microsoft.

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