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Why the Microsoft Settlement Won't Work Continued By Timothy F. Bresnahan

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What next?

We need a remedy that will reopen the market to competition and innovation and give computer users and developers as much choice as they would have had without the violations. But the deal signed by Microsoft and the Department of Justice last winter won't do it. It is chockful of escape clauses and other ways for Microsoft to pressure third parties, squelch innovations from competitors, and block entrepreneurial start-ups from gaining access to your desktop.

As for the states that are continuing the trial, they are now intent on forcing Microsoft to disclose technical information with which software developers could create products that work with Windows. They also want OEMs to have more flexibility and freedom from restrictive contracts and retaliation by Microsoft. Judge Kollar-Kotelly is considering these requests.

I particularly like an idea that those states have reluctantly forsaken: spinning off the Office software suite, including the Explorer browser, into a separate company. Only such a move would truly offer competitors to Windows an opportunity to enter and compete. For example, many more people would use the Linux operating system if it ran Office, especially an Office no longer subject to Microsoft's strategy tax. Meanwhile, middleware entrepreneurs could turn to the Office company as a distribution partner if the Windows company tried to block them. Consumers and developers would be given many more choices.

Sadly, it probably won't happen. And there aren't many options in between this sort of divestiture and a slap on the wrist. The most promising of those is compelling Microsoft to publish protocols (and the code that supports them) so that Internet software can work smoothly and transparently with Windows and Internet Explorer. The larger choice among innovations would leave users and developers worse off than if the lawbreaking had never happened, but better off than they are today.

By Illustration: Mick Wiggins

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