Update: Court shoots down Massachusetts appeal

A U.S. appeals court has rejected an effort by the commonwealth of Massachusetts and two IT industry groups to overturn the antitrust settlement between the U.S. Department of Justice (DOJ) and Microsoft.

The Wednesday ruling rejects appeals by the commonwealth of Massachusetts, the Computer and Communications Industry Association (CCIA) and the Software and Information Industry Association (SIIA), which argued that the November 2002 antitrust settlement between Microsoft and the DOJ was not in the public interest.

But in the 83-page ruling, Chief Justice Douglas Ginsburg of the U.S. Court of the Appeals for District of Columbia said the three appellants in the case failed to prove the need for additional antitrust penalties against Microsoft. Among the additional penalties Massachusetts asked for were for Microsoft to release the code for its Internet Explorer (IE) browser and to separate the "commingling" of IE code and the Windows operating system.

The settlement, approved by U.S. District Court Judge Colleen Kollar-Kotelly, went far enough by allowing OEMs (original equipment manufacturers) and consumers to remove IE middleware from the operating system and install competing browsers, Ginsburg wrote. Removing middleware code that affects IE functionality would hurt consumers and independent software developers, and could be nearly impossible to do, Ginsburg said.

"The district court, by remedying the anticompetitive act of commingling, went to the heart of the problem Microsoft had created, and it did so without intruding itself into the design and engineering of the Windows operating system," Ginsburg wrote. "We say, well done!"

Microsoft Senior Vice President and General Counsel Brad Smith cheered the ruling. "We're obviously very gratified with today's decision, and we're pleased that it takes another significant step forward in adding legal clarity and putting the issues of the past behind us," he said during a Wednesday conference call with press.

Smith said his company's "job number one" was fulfilling its obligations under the antitrust settlement.

Microsoft was also pleased that the court's decision focused on the issue of whether to remove components of the Windows operating system, Smith said.

"Competitors and regulators have been focused on whether it would make sense to remove software code from the Windows product," he said. "Today's unanimous decision thoroughly affirms the principle that removing code from Windows is neither necessary nor helpful for our industry or consumers. To the contrary, the Court of Appeals made clear today that removing software code from Windows would be a huge step backward."

The question of whether to remove Windows code remains a central one in Europe, where the European Commission has ordered Microsoft to begin offering a version of Windows without Windows Media Player. Earlier this week, the European Commission temporarily suspended the enforcement of the order requiring this change, one day before it was scheduled to take effect.

Smith said he hoped Europeans would take note of Wednesday's decision, which "addresses many of the precisely same questions that are front and center in Europe."