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Now the hard work starts: Choosing remedies

Following U.S. District Judge Thomas Penfield Jackson's 43-page "conclusions of law" statement that rules Microsoft engaged in illegal conduct, questions remain as to what can be done.

    In a 43-page "conclusions of law" statement, U.S. District Judge Thomas Penfield Jackson ruled that Microsoft engaged in illegal conduct. The question now is what can be done about it.

    Crafting a remedy for Microsoft's violations could prove to be one of the more difficult tasks for Jackson in an already contentious case. Settlement discussions imploded last week, after the two sides failed to come to terms on what Microsoft should be allowed to do in the future.

    Another difficulty facing Jackson is gauging the long-term effects to both the economy and to Microsoft of a breakup or restrictions on the company's conduct. On top of that, an appeals court, or the Supreme Court, could alter Jackson's decision significantly over the next two or more years.

    The government is almost certain to ask for preliminary restrictions on Microsoft's behavior during the appeals process; they could be put in place as early as summer. Those restrictions would likely limit which new technologies Microsoft could add to Windows, said George Washington University School of Law professor Bill Kovacic.

    "The difficulty with the outcome yesterday is that Microsoft's competitors or those that listen to them in the plaintiff's camp will not be bashful about proposing restrictions," he said. "I think we're going to see strong remedial suggestions and some that try to stop bundling in its tracks. The kind of the thing for debate in interim measures is to draw the line with products in the marketplace and preclude product introductions that tack in new features."

    Microsoft's insistence that it has the right to integrate whatever it chooses into Windows was an essential element of its defense and one reason settlement talks collapsed over the weekend. A Friday proposal made by 19 states, which with the Justice Department (DOJ) brought the case, would have put severe restrictions on what Microsoft could put into Windows.

    The case at its essence was about Microsoft using every means possible to preserve its Windows franchise and extend its monopoly into new markets, such as Web browsers. Part of the monopoly extension claim focused on the software maker tying--"integrating" in Microsoft vernacular or "bolting," according to the government--Internet Explorer to Windows.

    Even if Microsoft and the plaintiffs can eventually agree on integration issues with regards to Explorer, though, the integration debate will be far from over.

    see message board: Discuss the Ruling While the government fixated on Microsoft integrating Internet Explorer into Windows, the Redmond, Wash.-based software maker went on an integration spree, bundling all kinds of technologies into Windows NT and Windows 2000, Gartenberg said.

    These include essential tools for setting up corporate Intranets and running e-commerce operations, all available essentially for free with the operating system. While integrating these technologies could be viewed as a competitive move against Linux and Apache Web server, it also potentially extends Microsoft's Windows monopoly into new markets.

    Nobody in the antritrust case seemed "to be looking at what Microsoft is doing integrating more technologies into its server products," said Gartner Group analyst Michael Gartenberg. Microsoft, no doubt, will state that these issues aren't part of the case.

    Trustbusters, however, will scrutinize other areas of Microsoft's business practices, particularly how it competes in new markets and the effects of its operating system monopoly on them, said Dana Hayter, an intellectual property attorney with Fenwick & West in Palo Alto, Calif. Otherwise, the government could get stuck with filing cases every few years.

    If prosecutors are successful getting a preliminary order restricting what Microsoft puts into Windows, it could not only affect future product development but also hurt Windows 2000, which Microsoft increasingly is betting its future on.

    Many legal experts expect the government may push for breakup.

    "Whether or not the judge would sustain that is uncertain," said University of Baltimore School of Law professor Bob Lande, who gave a breakup remedy only a 10 percent chance of surviving all the way through an appeal to the Supreme Court.

    More likely, Jackson would accept "conduct" remedies that restricted Microsoft's behavior, something that might do better on appeal, Lande said.

    The integration claim ironically is the weakest area of the government's case on appeal, in part because of an earlier appeals court ruling that set a generous standard "of any plausible benefit" for determining whether Microsoft could combine the browser with the operating system.

    "I'm surprised Jackson found the technological tying of the browser to be a violation," said Glenn Manishin, an antitrust attorney with Patton Boggs in McLean, Va. "That's the area he faces the most vulnerability on appeal." Lande agreed, as did Hayter and Kovacic.

    An appellate reversal could free Microsoft to again freely integrate new technologies into Windows, assuming Jackson imposes a temporary restriction.