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Attorney General Lockyer Announces Extension of Court Judgments in Microsoft Monopoly Case

Agreement Extends Provision Aimed at Fostering Competition in Server Market
Friday, May 12, 2006
Contact: (415) 703-5837

(SACRAMENTO) – Attorney General Bill Lockyer today announced a key provision of the 2002 state-federal antitrust judgments with Microsoft Corporation (Microsoft) will be extended at least two years while the firm revamps its efforts to comply with the judgments’ requirement that Microsoft help competing servers function with the Windows desktop.

“This provision is forward-looking and one of the most important remedies in the judgments,” said Lockyer. “By fostering competition and innovation, it will benefit consumers by making their computers more versatile and efficient. Unfortunately, Microsoft’s efforts to comply with the requirement have fallen short. To its credit, the company has acknowledged that failure, agreed to go back to the drawing board and accepted this extension. This is a significant agreement that will help ensure the settlement achieves its important objectives of marketplace and consumer protection.”

The November 2002 judgments resolved federal-court antitrust lawsuits filed by the U.S. Department of Justice, California and other states and Washington D.C. The federal court of appeals in Washington D.C. found Microsoft had maintained an unlawful monopoly. After that ruling, requirements were imposed on Microsoft designed to reduce the firm’s monopoly power by increasing competition. The judgments were entered in U.S. District Court in Washington D.C., and are set to expire in November 2007.

The agreement announced today applies to the judgments’ provision that requires Microsoft to develop and license “communication protocols” to allow competing servers to function effectively with the Windows desktop. To date, the protocols provided by Microsoft have proved to be of limited use to competitors. Recently, Microsoft determined that, in order to fully comply with the judgments, it needed to completely rewrite the protocols. The extension will allow the firm to complete that process.

Under the agreement, communication protocol provision will be extended at least through November 2009. If they determine more time is necessary, the states and federal government can ask the court for an additional three-year extension, through November 2012. Protocol licensees also will be able to obtain licenses through November 2017.

Aside from the extension, Microsoft also has agreed to give all licensees using the current communications protocols a credit for any royalties owed, while the protocols are rewritten. Additionally, Microsoft will provide licensees more technical support, and contribute $1.6 million to help fund compliance enforcement.

The parties informed the district court of the agreement today in a joint status report on enforcement of the judgments. A formal order to extend the communication protocol provision was not included in the status report. The parties, however, will submit to the court a proposed order reflecting today’s agreement.

Government-entity parties to the agreement include: California, Connecticut, Florida, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, New York, North Carolina, Ohio, Utah, Wisconsin, Washington D.C. and the U.S. Department of Justice.

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