By Stephen Labaton, NYT
Washington: Microsoft has agreed to make changes to its Windows Vista operating system in response to a complaint by Google that a feature of Vista is anti-competitive, lawyers involved in the case said on 19 June.
The settlement, reached in recent days by state prosecutors, the Justice Department and Microsoft, averted the prospect of litigation over a complaint by Google that Vista had been designed to frustrate computer users who want to use software other than Microsoft's to search through files on their hard drives.
Google had made its complaint confidentially as part of the consent decree proceedings set up to monitor Microsoft for any anti-competitive conduct after it settled a landmark antitrust lawsuit five years ago that had been brought by the states and the Clinton administration.
The federal government and the states were planning to file a joint status report by midnight on 19 June in the consent decree proceedings that outlined the changes Microsoft would be making to Vista. State and federal lawyers were exchanging drafts of the report. They said they had reached agreement on a remedy, although there was still some disagreement over the report's language. The disagreement reflected tensions between the Justice Department, which initially sided with Microsoft in the dispute, and some of the states, which have supported Google and advocated a more aggressive stance.
Richard Blumenthal, the Connecticut attorney general, said on 19 June that he had not decided whether Connecticut would sign on to the settlement, although most of the other states were comfortable with the agreement. He said that he was continuing to press the Justice Department to permit Google and other competitors of Microsoft to participate in a hearing on the matter next week. He added that as a result of pressure from the states, the Bush administration had taken a position closer to that of the states that found merit in Google's complaint.
"The Justice Department has moved and so has Microsoft," Blumenthal said.
Executives at Microsoft and Google declined to comment before the report was filed with the court. Google has sought to keep a low profile in the dispute, in part because the Federal Trade Commission has recently opened a preliminary antitrust investigation into Google's proposed $3.1 billion acquisition of DoubleClick, an online advertising company.
Lawyers involved in the proceeding said the changes to Vista would allow consumers to decide which desktop search program they want to use, and that selecting software from Google or some other company would no longer slow down the computer as it does now. They said that as part of the settlement, Microsoft would let Vista users know how to change their desktop search program. But the settlement would not require Microsoft to make all the changes that Google had sought.
The settlement closes another contentious chapter in the long-running antitrust proceedings involving Microsoft, which have been marked by tension between federal and state prosecutors.
In a letter sent to state prosecutors early last month, Thomas O. Barnett, the Justice Department's top antitrust lawyer, had urged the rejection of Google's complaint. Google had circulated a white paper outlining its complaint to federal and state prosecutors a few weeks earlier.
But the Justice Department reversed course after state attorneys general reacted angrily to Barnett's letter and said they would proceed against Microsoft without the Justice Department. The change in position was a rare recent instance in which the Justice Department's antitrust division toughened its position in response to pressure from the states.
State officials said they were angered by Barnett's letter in large part because before he joined the Justice Department, he had been the vice chairman of the antitrust department at Covington & Burling, a law firm that represented Microsoft and played a central role in settling the antitrust case. While at Covington, Barnett did not work on the antitrust case, although he did represent Microsoft in other matters.
During his first year at the Justice Department, and for several months as the head of the antitrust division, Barnett avoided working on any Microsoft matters. Officials said he has worked on the case since he received permission from government ethics officials. But state officials said his letter supporting Microsoft was the first time they knew of his involvement in the case.
Desktop search programs have become popular as the volume of information stored on personal computers has multiplied. The big money in the fight between Google, Microsoft and Yahoo is over advertising revenue from web search engines. But desktop search programs help to build loyalty toward a particular search company.
Google maintained that its desktop search program, available as a free download, was slowed by an equivalent feature that is built into Vista. When the Google and Microsoft search programs run simultaneously, their indexing programs slow the operating system considerably, Google contends. As a result, Google has said that Vista violated Microsoft's 2002 antitrust settlement, which prohibits Microsoft from designing operating systems that limit the choices of consumers.
Microsoft has replied that Vista was in compliance with the consent decree and that the company had already made many modifications to the operating system, including some that had been sought by Google. In a recent interview, Bradford L. Smith, the general counsel at Microsoft, said that the new operating system was carefully designed to work well with software products made by other companies. He also added that an independent technical committee had spent years examining Vista for possible anti-competitive problems before it went on sale.