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Settle Down! Microsoft & DOJ Reach Agreement

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In a surprise ending to the long-running Microsoft antitrust trial (see Matt Deatherage’s “Who Do You Antitrust” articles in TidBITS-455 and TidBITS-456), the U.S. Department of Justice (DOJ) and Microsoft jointly announced a settlement today.


Although the full terms of the settlement have not yet been made available, the main strokes of the agreement are clear. In exchange for the DOJ and the 19 states dropping their antitrust suits, Microsoft has agreed to “perform 2.1 billion hours of community service.” The terms were initially confusing, since Microsoft headquarters are located in the upscale Seattle suburb of Redmond, Washington, but it turns out that both “community” and “service” have innovative definitions.

The DOJ’s definition of community for the purposes of the settlement is “the worldwide community of individuals and corporations using Microsoft operating systems released since 23-Aug-95.” That the DOJ would identify such a large and amorphous group as a community is stunning, but the implications of the definition of service is equally amazing. According to the DOJ, service is “technical support for any computer software product that operates under eligible operating systems.” In short, Microsoft must now provide free (and toll-free!) technical support for any Windows application. It’s not yet clear if Windows CE and Windows NT are included in the settlement.

Representatives of the 19 states involved in the antitrust suit also pushed for specific wording that would address additional problems. The terms of the settlement call for Microsoft to hire and train existing welfare recipients in those states to make up at least 65 percent of the total technical support staff necessary to handle the increased call volume. Plus, Microsoft has the choice of either installing satellite campuses around the country or helping to beef up the existing telecommunications infrastructure so these people can telecommute.

Microsoft Assistance — Microsoft’s vaunted public relations team quickly moved to put the best possible face on the settlement, dubbing it “Microsoft Assistance,” and suggesting that the idea originated with Microsoft chairman and co-founder Bill Gates. “The proposal surfaced only after Bill went to Washington,” said a Microsoft spokesperson. “We’ve always said that we want to provide the best possible experience for our users, and the research that led to Microsoft Bob also suggested that people learn best when interacting with other people.”


In a ceremony in Seattle, Microsoft president Steve Ballmer dedicated the new Microsoft Assistance program to the memory of the late industry writer Cary Lu. Ballmer recalled a meeting at which he’d announced the hiring of 1,500 additional technical support representatives and Cary had asked if Microsoft anticipated a time those positions would be unnecessary because Microsoft’s software didn’t require as much support. Ballmer noted, “I finally have an answer for Mr. Lu. In my role as president of Microsoft – and Bill agrees with me on this – I can categorically state that every product team at Microsoft now has the goal of totally eliminating the need for technical support.”


Implications — The implications of the agreement reverberated around the computer world. Quick-witted companies developing Windows products immediately announced plans to release their beta software for sale. On a more human note, many tech support departments will apparently be laid off, although support technicians we spoke with felt they could get jobs with Microsoft, whose stock options are preferable anyway.

The big loser in the settlement would seem to be Apple Computer, which has long made much of the fact that Macs require less support than PCs running Windows. With technical support being free for all Windows users, there’s less incentive to buy a Macintosh based on lower support requirements. Apple interim CEO Steve Jobs, looking uncharacteristically stunned, tried to make light of the situation, joking that at least when you called Apple for technical support, you won’t have to listen to screaming kids in the background.

Wall Street had feared more significant damage to Microsoft based on the company’s surprisingly inept defense during the antitrust trial. So when the settlement was announced, investors reacted predictably, driving Microsoft stock to a new high and thus officially increasing Bill Gates’s net worth to over $100 billion. Charles Schwab analyst Makim Richer commented, “What we have here is in many ways a joint project between the U.S. federal government, 19 state governments, and the most successful software company ever. No matter how you look at it, it’s a win-win deal for Microsoft, the American people, and the world.”

Enter Winux — Also today, Microsoft said that it plans to release its Microsoft Office suite of applications for Linux, the popular open-source Unix variant that has offered significant competition for Windows NT. A Microsoft spokesperson said that the company is committed to serving its users, particularly those for whom it doesn’t have to perform free support. And in a speech from Washington, D.C., where Microsoft chairman Bill Gates was personally negotiating the terms of the settlement, Gates also noted that although Windows 2000 remains on schedule for release in the second quarter of 2001, Microsoft plans a new operating system, called Winux. According to Gates, Winux “gives our users the stability and performance we all admire in Linux, along with the friendly interface of Microsoft Windows.” After showing a videotaped demonstration of icons moving around on a reputed Winux desktop and a wizard that helped users recompile their kernels, Gates was careful to point out that Winux is not Windows and thus won’t fall under the terms of the settlement.

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