Microsoft to Google: Take an antitrust lesson from us

The software maker's deputy general counsel says it's learned its lesson in dealing with regulators. Is Google listening?

BOSTON--A Microsoft attorney says the company has learned how to deal with antitrust regulators and that Google could glean a thing or two from the experience.

Marshall Phelps, corporate vice president and deputy general counsel, said that if Microsoft had negotiated sooner with the U.S. Department of Justice, it might have avoided further trouble. The company has had a running battle with regulators for more than a decade, and in 2002, it signed a landmark settlement with the federal government that called for more stringent oversight of the company's practices.

Marshall Phelps Marshall Phelps

"Had Microsoft been a little quicker to give in on this, that and the other, (it) wouldn't be in the same pickle," Phelps said.

Phelps, who spoke at the Red Herring East conference here, said "one of the problems companies get into (is) when they don't realize how powerful they are and how powerful they are perceived as being." He then directed his comments at Google, one of Microsoft's main rivals in online search and applications.

"Google is going to face the regulatory burdens that Microsoft faced. It's going to be legislation by bad example. Something awful is going to happen, and legislators will run off and draft something that deals with privacy issues," Phelps said.

Phelps had some suggestions for companies facing antitrust regulators.

"Discretion is the better part of valor, and it's better to be a bit more humble in the face of regulators because they are never going to go away," Phelps said. "I don't care how many good lawyers you have or how much money. The regulators still win. That's just the rule. All the more reason you want to be cooperative and make the government think they won. You want to say, 'Yep, you won. We'll change our practices.'"

Microsoft is following that advice, changing its own practices and "desperately trying" to make regulatory peace with the European Union, Phelps said.

Google may not agree with Phelps' statement. The company recently filed a complaint with a federal judge, arguing that changes Microsoft has agreed to make in its Vista operating system fall short of addressing concerns that its computer search function puts Google and other potential competitors at a disadvantage.

But Google was rebuffed, at least for now, by the federal judge presiding over Microsoft's antitrust compliance. Judge Colleen Kollar-Kotelly said she didn't plan to comment on that filing and deferred to government regulators to alert her if they decide that Microsoft does, in fact, need to make more changes than the ones they already agreed to implement.

CNET News.com's Anne Broache contributed to this report.

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