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MS antitrust deal close – WinXP, bundling to emerge unscathed?

The terms leaked so far sound strangely toothless...

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Microsoft and the DoJ seem close to cutting a deal, and from the sound of the terms leaking from the settlement talks, the Beast stands a good chance of emerging relatively unscathed. That is, if the States attorneys general can be persuaded to go along with it.

It's possible that the full deal being proposed is tougher than the elements that have got out imply, but from what we know so far it seems likely that the actual toughness of the settlement will depend on interpretation, and how rigorously it's enforced. After the DoJ effectively fell asleep during the negotiation of the last deal, Microsoft was able to insert wording that later allowed it to get away with bundling IE, and it's perfectly possible that something similar is happening again today.

The terms themselves seem to have leaked after being presented at a meeting between the DoJ and the attorneys general yesterday. They take the form of a five year consent decree with a possible two year extension if Microsoft is deemed to have violated the terms, and there is to be an independent three person panel of experts to monitor enforcement. But it is the nature of the decree's content that is important, rather than the headline 'five year sentence.'

Microsoft appears to have conceded on differential pricing and restrictive contracts, so depending on how this is implemented it ought to be more difficult for the company to make it financially attractive for its special friends in the PC business to do its bidding. But although this might have been helpful a few years back when there was some sort of competition, Microsoft position is now so dominant that it's doubtful that this concession will make the slightest difference. And if the campaign against "naked PCs" being waged under the anti-piracy banner continues, it will still be extremely difficult to buy PCs that don't come with Microsoft software on them, and the 'Redmond tax' will therefore still be levied on practically everything that goes out the door.

Set against this apparently now minor concession, Microsoft seems to have successfully moved XP out of the firing line. Its integration of IE and Windows Media Player into the OS does not seem to have been objected to. Future integration will also be possible for the company, but this could be muted a little by Microsoft having to offer PC companies the ability to choose a version of the product that doesn't have these new products built in. The most obvious thing about this part of the deal is how fuzzy it is; if the leaks are correct that XP is unscathed, then Microsoft can happily continue its current incursions into the digital media market unchallenged.

And although being forced not to impose 100 per cent integration in its future excursions into bundling may well be helpful in the future, XP already is the mother of all bundles - there's quite enough in there to keep Microsoft busy for a couple more years.

The final part of the deal to have made it into the public domain concerns access to Microsoft code. Rather than going for any of the more drastic solutions such as forcing Microsoft to license Windows or to make source code public, the DoJ appears to be settling for a much more limited option. Qualified personnel from software and hardware companies would be allowed to inspect Microsoft code in some form of secure facility - you may well wonder what the blazes that's supposed to mean.

It's not as yet clear who would be deemed to be qualified, and who would have the final say-so on their access. Nor is it obvious that this kind of arrangement differs massively from the existing source access deals Microsoft has with some of its major customers, and some hardware suppliers. We can be pretty sure that Sun, which most certainly could not achieve such access at the moment, will be in there inspecting, shouting and screaming if this part of the deal goes ahead, but we can't be entirely sure how helpful these insepction rights will be, if at all.

So is that it? Maybe, maybe not. From what we know so far, the deal looks to have the potential to be spectacularly toothless; if there's something else yet to be disclosed that could change this, it'll have to be big. It also seems highly unlikely that the States, who've adopted a more hawkish attitude than the DoJ, will accept it. So it looks close, but maybe not as close as it looks... ®

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