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It’s finally over. Nearly 10 years after Microsoft Corp. signed an agreement with the government to resolve antitrust charges against it, the company is free of federal oversight. The final judgment against Microsoft, designed to restore the potential for competition for “middleware” software, expired today. Other provisions in the consent decree ended in November 2007. “Our experience has changed us and shaped how we view our responsibility to the industry,” an unnamed Microsoft spokesperson said in an e-mailed response to questions. “We are pleased to bring this matter to successful resolution.” But some lawyers are skeptical about just what the settlement achieved. “It was the antitrust case of the decade…but the remedy turned out to be a slap on the wrist,” said Bert Foer, president of the American Antitrust Institute, who noted that Microsoft’s Windows operating system still controls about 90% of the personal computer market. In 1998, DOJ and attorneys general for 19 states plus the District of Columbia filed suit against Microsoft, alleging the company abused its market power to thwart competition. The core allegation in the original suit, upheld by the U.S. Court of Appeals for the D.C. Circuit in June 2001, was that Microsoft had unlawfully maintained its monopoly in PC operating systems by excluding competing middleware that posed a nascent threat to the Windows operating system. The Justice Department in a news release touted the settlement’s legacy, which included the establishment of an independent technical committee to assist the court and the government in ensuring Microsoft’s compliance. “The competitive landscape changed allowing the marketplace to operate in a fair and open manner bringing about increased innovation and more choices for consumers,” according to DOJ. “The judgment protected the development and distribution of middleware–including web browsers, media players and instant messaging software–thereby increasing choices available to consumers.” Duane Morris partner Glenn Manishin, who represented trade groups that challenged the settlement, agreed the market has changed, but said “few if any of those changes are a result of the Microsoft antitrust consent decree.” “I still believe DOJ squandered an opportunity to remake the industry by divestiture in a way that is surer and cleaner than the ‘behavioral’ decree they got,” he said. “The consequence is that Microsoft’s business practices were under constant scrutiny by the government for a decade…and it became a very passive competitor, just as IBM did in the late 1970s.” He continued, “On the other hand, the PC industry evolved radically far faster and in ways very different from those forecast in 2000-02 without any help from the decree. Mobile devices, Web apps, cloud computing, etcetera, are all completely unaffected by the narrow decree.” Deborah Platt Majoras, who is now chief legal officer of The Procter & Gamble Co., served as the Justice Department’s point person in negotiating the settlement when she was deputy assistant attorney general of the Antitrust Division. In a 2003 interview, she recounted how the deal was hammered out. The case had been remanded from the D.C. Circuit to U.S. District Judge Coleen Kollar-Kotelly, who ordered the parties into settlement talks after the terrorism attacks of Sept. 11. “In light of the recent tragic events affecting our nation, this court regards the benefit which will be derived from a quick resolution of these cases as increasingly significant,” she wrote. She also told the parties to hire a mediator, who limited each side to no more than four lawyers in the room. On the government team were Majoras and Phillip Malone, a career DOJ lawyer. Representing the 20 states also party to the suit were Jay Himes from the New York attorney general’s office and Beth Finnerty from Ohio. On Microsoft’s side were Charles “Rick” Rule, a partner at Fried, Frank, Harris, Shriver & Jacobson; Steven Holley of Sullivan & Cromwell; and Microsoft in-house counsel Thomas Burt and David Heiner. The lawyers worked around the clock for a month at Fried Frank’s offices (selected because the firm – unlike DOJ – provided snacks) to reach a deal. “I think [the settlement] is one of the most misunderstood things we’ve seen,” Majoras said, recalling that the lobbying by Microsoft competitors was relentless. “I had lawyers telling me to disregard the judge’s orders. People didn’t want to accept that the Court of Appeals changed the case.” She was adamant that the settlement was not politically motivated. “I never heard word one from the folks in the White House,” Majoras said. “We were left alone to do what we thought was right for the consumer.” Jenna Greene can be contacted at [email protected] .

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