Under terms of the five-year consent decree revealed Nov. 2, Microsoft must disclose to the computer industry the APIs and protocols that its middleware products and servers use to communicate with Windows. The vendor must also stop using its software licensing agreements with PC makers and independent software vendors to punish or threaten companies that work closely with Microsoft's competitors. And Microsoft agreed to a ban on contracts that require exclusive use of its products.
The attorneys general of 18 U.S. states that joined the Justice Department's case against Microsoft called the tentative settlement "promising," but indicated they may ask for changes before a federal judge approves the deal.
The new disclosure rules--which apply to Microsoft's Web browser, E-mail clients, media players, and instant-messaging software--seek to promote competition in the software industry by giving software developers more information about how Microsoft's application software interfaces with Windows. That could blunt Microsoft's advantage in certain markets, potentially allowing other companies to mimic the performance and integration of Microsoft apps.
"People are trying to get access to these higher-level tools that are embedded in the operating system," says Kerry Genontiantos, president of Incremax Technologies Corp., a New York development shop, and president of the International Association of Microsoft Certified Partners, a trade group of about 600 software companies. "The amount of documentation Microsoft publishes around its operating system and tools is vast," he says. But independent development shops want more APIs and sample code that shows how to interface with Microsoft products such as Exchange Server. "As you get closer to the application layer, there's less information there."
Other software-industry executives say Microsoft's public API set doesn't include information about the newest software Microsoft bundles into Windows, which is first made available to the vendor's closest partners. "Microsoft is constantly evolving their operating system, adding feature sets that aren't yet ready for prime-time consumption," says Dale Fuller, CEO of development tools vendor Borland Software Corp.
Microsoft chairman Bill Gates says he agreed to "significant rules and regulations" governing Microsoft's product development. According to the agreement, a panel of three independent experts would ensure compliance through access to the company's books, computer systems, personnel, and source code. "We're accepting quite a broad set of new requirements on the company," Gates said in a conference call Friday.
Even given the new restrictions, Microsoft has emerged from its three-year antitrust fight with the government in better shape than opponents had hoped. The threat of a breakup is gone, and Friday's agreement requires no large changes to the company's products. Yet other legal battles remain. The European Union is investigating links between Microsoft's media player and Windows 2000. And the U.S. states say the settlement deal doesn't prevent Microsoft from leveraging its PC operating-system monopoly in the markets for servers and handheld computers. The states also say letting Microsoft bind client software and middleware to Windows violates a June appeals court ruling that banned the company from "commingling" code in order to protect its monopoly.