Ballmer instructs Microsoft on settlement

"I take this settlement very seriously and am personally committed to making it a success and ensuring that everyone at Microsoft complies fully with the terms," Ballmer wrote in an e-mail seen by CNET News.com. "This settlement imposes important restrictions and obligations on us as a company, and on many business units and individual employees. Every Microsoft employee has a responsibility to understand these restrictions and obligations and to conduct our business accordingly."

The software giant and the Justice Department earlier this month settled their long, acrimonious antitrust battle with an agreement that many labeled a victory for Microsoft. The proposed deal seeks to impose relatively mild restrictions on Microsoft compared with earlier rulings in the 3-year-old case. The settlement focuses largely on tweaking Microsoft's competitive behavior.

The e-mail also contained a lengthy explanation of the settlement by Dave Heiner, an attorney in Microsoft's law department, with guidance on how it will affect specific employees and business units. Although a consent decree has not been officially approved by the court, Microsoft agreed to begin complying with it Dec. 16.

Heiner noted that some provisions will be pertinent to the work of large numbers of Microsoft employees.

"These are primarily the provisions that relate to Microsoft's relationships with other companies," Heiner wrote. "Other provisions, while equally important, will be implemented by far smaller groups of employees."

But the attorney stressed that everyone at Microsoft must be aware generally of the terms of the settlement.

Heiner's note instructed employees on the definition of a consent decree, a contract imposed by the court.

"That means that the consent decree is a court order--an injunction prohibiting or requiring certain conduct. Court orders must be observed faithfully," he wrote. "A violation of a court order is punishable by contempt of court, a serious offense."

He further addressed the role that the nine holdout states that declined to settle are now playing in the case. These states refused to accept an agreement between the Justice Department and Microsoft, choosing instead to press further antitrust litigation against the company because they believed the proposed settlement was soft on the software giant.

"Our case is complicated by the fact that nine states and the District of Columbia declined to join in the settlement," Heiner said, adding that the parties are now exchanging documents and gathering other types of evidence in preparation for a hearing before the court scheduled for March 2002.

Mum's the word
Perhaps in acknowledgement of the embarrassing situation that arose when e-mails between top Microsoft brass were introduced during the trial to show the company's alleged strong-arm techniques, Heiner told employees to avoid speculating about the significance of the settlement through e-mail.

"The decree is a complicated legal document, and speculation concerning its significance in a particular factual context is not likely to be productive unless you are seeking advice from your...lawyer," he wrote. "Therefore, please do not write e-mail about the consent decree, other than when seeking advice of counsel."

In related news, Senator Orrin Hatch of Utah, an influential Republican on the Senate Judiciary Committee, has sent a letter to Justice Department Antitrust Chief Charles James in which he raises numerous questions about the government's settlement with Microsoft. Hatch asked for explanations on how the settlement may affect some of Microsoft's newer products and services.

"The questions are directed to the Justice Department, so they will be developing a response," said Microsoft spokesman Jim Desler. "But we appreciate that Senator Hatch has remained open-minded about the settlement and are hopeful that once his questions are answered, he will conclude that this is a fair and responsible agreement."