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MS tries to spin up a deal with DoJ

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Just days after the DoJ said it wasn't going to continue asking for Microsoft to be split, the spinning has recommenced in earnest. It started on the wires over the weekend, and according to a story in today's Wall Street Journal the company is preparing a settlement proposal for submission to the government, but is so far keeping quiet about what it's actually going to contain.

We have been here before, back in the weeks before Judge Posner pulled the plugs on the last settlement talks, complaining about "leaking and spinning." This time around it's not yet clear that the DoJ's move on the split is a sign of weakness, but Microsoft seems to be taking it as such, and at least a couple of States attorneys general seem to be inclining to the same view. The WSJ cites Microsoft CEO Steve Ballmer as saying the imposition of conduct remedies on Microsoft would be just as damaging as a break-up, so we can take this as a bid to take the sting out of any limitations on the company's behaviour the government might care to ask for.

We don't know, and are unlikely to receive an accurate account of, what's in the proposals, but we can surely expect to be hearing how reasonable and generous they are very soon.

Given current legal realities, there's a positively heroic chutzpah to Ballmer's and Microsoft's stance. Microsoft, in case you'd joined the company in forgetting, has been found guilty of a string of antitrust violations, and an appeal court has confirmed its guilt, although further appeals will crank on. The case has now been sent back to the district court for Judge Colleen Kollar-Kotelly (a name to conjure with, very carefully) to consider what remedies to impose. The DoJ has meanwhile stated that it isn't going to call for a split, and isn't going to pursue the tying issue (one of the areas where the appeals court didn't agree with the lower court's verdict), but that it wants swift conduct remedies for the established violations. It also wants a period of "expedited discovery" that covers the period since the trial, so it's quite possible that Microsoft may also be found guilty of more recent violations.

Although the DoJ's statement last week was seen in some areas as the Bush administration letting Microsoft off, as yet there's no justification for such an intepretation. Unless the powers that be in the DoJ are lying (which is of course is possible), then they are simply trying to speed up the imposition of adequate and achievable remedies, while abandoning the tricky, dubious and legally lengthy ones. A Microsoft break-up always seemed a dubious and probably unworkable solution, and there was a fair bit of justification to Microsoft's claims that it would have destroyed the company. You and we might think that'd be richly deserved and a good thing for the industry anyway, but the US legal process is only supposed to be stopping Microsoft abusing its monopoly position.

The current Microsoft "settlement proposal" is probably more spin than substance at the moment, but we can expect the company to try to present itself as eager to deal, infinitely flexible and massively victimised by a vengeful DoJ intent on destroying a successful company. That pitch will no doubt have some impact on the Bush administration, and will tend to pressure the DoJ, even if it isn't looking for a quick way out.

As yet there's no way of judging how important the DoJ thinks it is to have the "expedited discovery", and whether or not this will turn out to be negotiable, something to be traded against conduct remedies for the sins already established. The attorneys general of New York and California would certainly seem to think so, and have demanded that WinXP receive "close scrutiny." This'll be precisely what it gets if the DoJ presses for it and the judge agrees - so maybe they know something, or maybe they're just grandstanding.

But if what Microsoft's been up to over the past several years doesn't end up being addressed in the remedies the courts impose or the government agrees, the trial will have been largely pointless. Microsoft can happily accept remedies that address misconduct which is obsolete, given that the victims largely no longer exist. And if that happens, it can equally happily carry on cannibalising and engulfing other people's business via other means, fairly safe in the knowledge that the US government will be reluctant to come back for another crack. But it hasn't happened - so far. ®

Related Stories:
DoJ abandons MS split, but wants court to check WinXP etc
Judge attacks 'leaking and spinning' in MS deal talks

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