Spinning The Antitrust Ruling, The Players Speak OutSpinning The Antitrust Ruling, The Players Speak Out

Just minutes after U.S. District Judge Colleen Kollar-Kotelly handed down her decision, the spinning started.

"A banner day for Microsoft," says Dwight Davis, an analyst with Summit Strategies. "This is a clear win for Microsoft. Everyone understood that the original settlement was attractive to Microsoft, more a slap on the wrist than anything. The ruling today should make them feel that their stand has been affirmed."

Most outsiders' voices echoed that line. "In general it sounds like a win for Microsoft," says Michael Silver, a VP and analyst with Gartner. "The federal and state cases go away, and although there are lots of open issues, it's good news" for Microsoft.

The reason it's a win for the folks in Redmond?

"This is not nearly as momentous as it could have been," Silver says. By sticking with the bulk of the provisions of the antitrust settlement between Microsoft and the Justice Department, and by setting aside many of the complaints by nine states that the settlement fell far short, the ruling eliminates the chance that Microsoft would be forced to comply with an entirely new decree. "I'm not sure this changes much," he says. "There won't be a huge change on the products that come out or the timing of their release."

Microsoft's foes see things differently, perhaps looking for the silver lining. Paul Cappuccio, general counsel for AOL Time Warner--whose Netscape operation has long been marked as one of the primary victims of Microsoft's practices--took a glass-half-full approach

"Judge Kollar-Kotelly made a weak settlement stronger and created some additional protections for consumer choice and competition. The court and the Justice Department have pledged to monitor Microsoft's compliance, and this should have some deterrent impact on its anti-competitive activity."

That take was voiced again and again in a conference call with the attorneys general of five of the nine states that demanded a stronger agreement.

"This is historic," says Dick Blumenthal, the attorney general for Connecticut. "The judge has made it clear the court imposes accountability at the highest levels of the corporation. It holds that directors of the corporation are responsible for compliance and rejects the view that Microsoft knows better. It sends a message to Microsoft that it must comply and will be held accountable."

Enforcement, in fact, is one of the more intriguing decisions in the judge's final ruling. A corporate compliance committee, consisting of Microsoft board members, is to hire a compliance officer who, in turn, is to make sure Microsoft lives up to the deal and report any violations to the states' attorneys general.

This compliance officer, in fact, must report annually to the nine states' attorneys general and certify whether Microsoft is fully compliant.

"By holding directors accountable for compliance, it gets Microsoft's attention," says Tom Reilly, the attorney general of Massachusetts.

But others were struck by the composition of the compliance committee.

"It sure sounds like the fox guarding the hen house," says Gartner's Silver.

Only Sun Microsystems called the ruling disastrous. A spokesman for Sun, which has a separate suit in the works against Microsoft, was aggressive in his denunciation of both the ruling and the way it's to be enforced.

"The weak steps that Microsoft has taken to comply with the requirements already show that the settlement will be ineffective in curbing Microsoft's anti-competitive practices and how difficult it will be to enforce, quite apart from the propriety of having Microsoft's own board members be the first line of compliance enforcement," the Sun spokesman says.

Microsoft's reaction was muted at best.

"We think this represents a fair resolution of this case," says Bill Gates, Microsoft's chairman and chief software architect. "We will devote the time, energy, and resources to meet these new rules. And I am personally committed to full compliance."

So, is this the end? Maybe, maybe not. Although the attorneys general wouldn't commit to a decision on whether they would appeal--citing the length and complexity of the ruling--they didn't rule it out. Like the states, Microsoft wanted more time to think it over, although Gates himself made it clear that, based on his first reading, "we're not seeing anything that would be cause for an appeal."

But Sun's spokesman urged the states to appeal, saying they "have ample grounds to do so."

Winners? Losers? Perhaps the best quote of the day came from Bill Lockyer, California's attorney general: "This is the ninth judge that ruled Microsoft broke the law, but it's neither a total victory nor a total defeat."