Microsoft's antitrust deal still alive, but so what?

The irony for Microsoft is pretty hard to escape.

The federal judge overseeing Microsoft's 2002 settlement with antitrust regulators noted at a hearing today (subscription required) that the software giant had made "extraordinary" progress in resolving outstanding issues. But just consider the much bigger story of the day: Mozilla's new Firefox 4 browser was downloaded 6.5 million times in less than 24 hours. (Check out Mozilla's real-time Firefox 4 download data here.) Compare that to Microsoft's Internet Explorer 9, introduced a week earlier and downloaded 2.3 million times in the first 24 hours.

Turns out the marketplace is doing a pretty good job of what the court tried to do. The Justice Department brought the case, alleging that Microsoft illegally used Windows to monopolize the browser market. A federal judge ruled against Microsoft, leading the company to ultimately settle with trustbusters, a deal U.S. District Court Judge Colleen Kollar-Kotelly has spent nearly a decade overseeing.

It may seem odd that a judge is still overseeing the nearly decade-old settlement. But Microsoft's deal with regulators requires it to abide by a series of guidelines--most notably, disclosing key technical information about making software applications compatible with Windows. Kollar-Kotelly continues to monitor Microsoft to make sure it abides by the consent degree.

In the meantime, though, the battleground for computing has shifted. Windows, the source of so much of Microsoft's power, no longer gives the company the cudgel it once used to thwart rivals. It's still the dominant computer operating system. But Mozilla doesn't need to play by Microsoft's rules to reach the masses. That's because the Internet, of course, matters much more than Windows.

Just look at the browser market. When Microsoft settled the antitrust case, it controlled more than 90 percent of the browser market. In February, according to Net Applications, Internet Explorer held 57 percent market share. It's still the leader. But Firefox has 22 percent of the market, followed by Google's Chrome with 11 percent and Apple's Safari with 6 percent. Certainly one reason for that shift is that the rival browsers are every bit as good, and sometimes significantly better, than Internet Explorer.

Firefox 4's outpacing Internet Explorer 9 in downloads is to some extent Microsoft's own doing. The company put itself at download disadvantage by making IE9, released March 14, incompatible with Windows XP, which, though long in the tooth, is still used by more than 40 percent of Web surfers. The company said it wanted to have a browser that could take advantage of the modern graphics technology of its newer operating systems. And surely, it doesn't hurt to encourage folks using the old operating system to upgrade by limiting the availability of the latest software.

To be fair, the antitrust case has played some role in shrinking Microsoft's power. It'd be hard to argue that the terms of the settlement have prevented Microsoft from using Windows to monopolize other markets. But the antitrust case raised the specter of drawn out regulatory hurdles to major acquisitions, likely tempering Microsoft's acquisition ambitions. And the company instituted corporate accountability guidelines in the wake of the settlement intended to curb the abuses that led to the antitrust case in first place.

The antitrust settlement is set to expire May 12. Much has changed in the intervening years. It faces emboldened rivals such as Google and Apple, as well as new technologies harnessed by Facebook and Twitter. Today's technology landscape would have been unthinkable when Kollar-Kotelly agreed to the antitrust settlement. The biggest change of all may be that Microsoft no longer dominates computing the way it once did. Just ask the folks at Mozilla.