Letter To Massachusetts Attorney General: Drop the Microsoft Appeal

Dear Mr. Reilly,

I am a Massachusetts resident and citizen, Mr. Reilly, and I am writing you today to ask you to drop the Microsoft case. At the very least, I urge you to rethink your appeal of the current settlement.

I should start by saying that as a technology reporter who has covered Microsoft for more than a year and followed the antitrust case for some time now, I find no fault with the pursuit of the nine states for stricter settlement terms on Microsoft's end. While I don't believe this company, one of the great symbols of both capitalism and innovation in this country, deserves to be split apart, I call into question the effectiveness of the seemingly weak settlement between the federal government under the Bush administration that was recently affirmed by U.S. District Judge Colleen Kollar-Kotelly. Therefore, Mr. Reilly, I find no fault in your effort to apply more stringent settlement terms upon Microsoft with this new appeal. However, numerous obstacles make success in the case highly unlikely.

Before delving into the present, let's take a look at the past. Microsoft has a history of non-compliance and legal trouble. The Federal Trade Commission first investigated Microsoft in 1990, probing the software company's pricing policies and allegations that Windows' source code was rigged to hinder competing software. That investigation was later take over by the U.S. Department of Justice, which reached a settlement in 1994.

The first judge on this case, U.S. District Judge Stanley Sporkin, rejected the settlement, arguing that it didn't go far enough to stop Microsoft's anti-competitive behavior. In a twist of irony, Sporkin was replaced by a federal appeals court in 1995 with U.S. District Judge Thomas Penfield Jackson, who would later be portrayed as a biased Microsoft hater after ordering a breakup of the company. Jackson approved the settlement, and the case was closed.

Two years later, after the historic launch of Windows 95, the Justice Department sued Microsoft for breaking the terms of the 1995 settlement agreement by forcing computer makers to install Microsoft's Internet Explorer Web browser on all Windows 95 machines. Attorneys general from more than 20 states followed the Justice Department and investigated Microsoft.

After some delays, 20 states also filed antitrust suits against Microsoft in 1998. After a two-year long trial, which included several delays and proposed settlements, Judge Jackson in 2000 ordered Microsoft to be split into two companies -- one for operating systems and one for applications -- after finding that Microsoft is a monopoly and engaged in illegal antitrust activities. Microsoft, of course, appealed the decision and in 2001 a federal appeals court threw out Judge Jackson's break-up order and replaced him with Judge Kollar-Kotelly. The appeals court also dismissed some of Judge Jackson's findings but ultimately ruled that Microsoft illegally maintained it's monopoly on the desktop and engaged in predatory business practices that violated antitrust law. Another judge pursuing stricter penalties, another federal appeals court overturning the decision and removing the judge from the case, and another seemingly soft settlement for Microsoft. You don't need to be a software programmer, Mr. Reilly, to add all this up.

Under the new Bush administration, the Justice Department in 2001 decided it would not longer seek a breakup of Microsoft and instead would look to settle the case. That leads us to our current predicament. I agree, Mr. Reilly, that the current settlement, fashioned by a corporate-friendly Justice Department, is filled with loopholes and terms that do little to ensure we don't see history repeat itself. Government officials have done their best to paint this as a fair agreement that will hold Microsoft in check, but we both know it's not true. Clearly, the ball is in Microsoft's court; if it chooses to violate the law once again, there is hardly anything in place to prevent the company from doing so.

Yes, the settlement did order Microsoft to open its APIs so that competing products can integrate better with Windows. Yes, Microsoft can no longer engage in restrictive contracts that penalize computer makers that offer other operating systems and applications. However, no action was taken on the issue of bundling applications such as Internet Explorer to Windows, which was the entire impetus of reopening the Justice Department investigation in 1997. Consumers won't, in fact, have the choice, which you and other states' attorneys general have fought, to remove Microsoft applications from Windows and configure their OS as they see fit. Therefore, the agreement is wildly incomplete in terms of addressing the key issues of the case, to say nothing of penalized Microsoft for breaking the law.

The only real change to the settlement made by Judge Kollar-Kotelly in her approval order last month was the creation of a "compliance committee" that will be charged with enforcing the settlement agreement. Unbelievably, Judge Kollar-Kotelly saw fit to appoint three of Microsoft's own board members -- Harvard Business School professor Dr. James Cash, Merck Chairman, CEO and president Raymond Gilmartin, and former U.S. Secretary of Labor Ann McLaughlin Korologos. Apparently, neither the judge nor the government couldn't smell the foul odor of impartiality that emanates from this decision.

Along with lax prevention, Microsoft wasn't penalized at all for its unlawful behavior. Despite being awash with cash, the Justice Department decided against fining the company. Such a move would have been a true deterrent for other companies entertaining ideas of circumventing our antitrust laws. Instead, the government took a quick fix instead and wasted years of time and money. Who could possibly fear our antitrust laws now? Of course, timing was an issue in this settlement. The economy plummeted and the Justice Department had new priorities after Sept. 11, 2001. But as a tax-paying citizen of this country, the outcome of this effort is simply unacceptable.

Therefore, Mr. Reilly, I understand and support your quest for a better solution in this case. But the issue I have isn't with Microsoft or the antitrust case. I'm not writing to debate whether Microsoft has broken the law, because the courts have already made that determination. My concern is you and the state of Massachusetts. There are simply too many obstacles, besides a court system and Justice Department that appears to favor Microsoft, that will prevent you and the state of Massachusetts from achieving the desired outcome of your pursuit of justice.

For one, seven of the nine states that had sought stiffer penalties for Microsoft have now abandoned the cause in the wake of Judge Kollar-Kotelly's curious decision. West Virginia is the only state joining your crusade, and it's attorney general's office has a meager $4.1 million annual budget. In addition, Massachusetts is facing whopping deficit and newly elected governor Mitt Romney has vowed to cut spending and reduce the budget. It's entirely conceivable that your office may incur budget cuts, therefore.

Mr. Reilly, Microsoft currently has more than $38 BILLION in the bank. The company has a legal department that dwarfs the state's. Quite simply, sir, this was the Justice Department's fight. The federal government was the only agency that had the time, funding and resources to wage such a legal battle. It was the Justice Department's job to look out for the citizens of this country. It was the federal government's job to protect consumers. It failed miserably and as much as I'd like to see someone pick up the fumble, I do not believe this is a battle that one or two states can realistically fight and win.

Another problem is that information technology has proven too large a subject for your average judge and legislator to properly put into context. They know little of APIs and middleware. They are in the dark concerning Internet standards. However familiar they may be with Microsoft, their knowledge of the overall industry leaves much to be desired.

Finally, Mr. Reilly, I believe that the state of Massachusetts and the DA's office has more important battles to fight. The numerous cases of child abuse within the Catholic Church are deplorable, as is its unwillingness to investigate its leaders here in Boston. The so-called "Big Dig," the multi-billion dollar highway project in downtown Boston, is an absolute mess, rife with corruption. There are just samples of crucial issues that are affecting our great state, issues which I believe take precedence over the Microsoft case.

I will end by stating once again that I believe your intentions are sound and that the case against Microsoft has merit. But now is simply not the time. There's nothing to say that the Massachusetts' Attorney General's Office couldn't revisit a case against Microsoft at a later date.

In fact, Mr. Reilly, the states' cause may be helped by being patient, as current lawsuits from Microsoft competitors such as AOL Time Warner and Sun Microsystems may pave the way for more legal action. U.S. District Judge J. Frederick Motz, who is overseeing Sun's request for an injunction against Microsoft for refusing to ship Windows operating systems that are compatible with Sun's Java software, said recently that he believes Microsoft "assaulted" Sun and compared Microsoft to infamous figure skater Tonya Harding, who was part of a knee-capping attack on rival skater Nancy Kerrigan. While Sun's lawsuit, if successful, won't solve most of the problems facing consumers, it is at the very least a start to repairing a once-competitive market that has been damaged by Microsoft's predatory business practices.

I commend your commitment, sir, should you choose to see this appeal through until the bitter end. However, I believe the rational course of action would be to postpone an appeal until Massachusetts and West Virginia can muster more support for this fight. While we very well may see a repeat of 1997's non-compliance and ask ourselves why we didn't seek more restrictive regulations for Microsoft, an appeal for harsher settlement terms isn't winnable right now. I urge you to rethink this course before it causes damage to our state.

Thank your for your time, Mr. Reilly, and your service to the people of Massachusetts.

Sincerely,

Robert Wright

Associate Editor, VARBusiness