Software giant more emboldened than ever


With the threat of an imminent breakup lifted, emboldened Microsoft Corp. executives will waste no time getting back to business as usual — and that means bundling more services than ever into their new desktop operating system.

“We believe that this decision sets a framework that allows us to move forward and integrate our products,” Microsoft spokesman Jim Cullinan said Friday of the federal appeals court’s antitrust ruling.

Cullinan said the company will review Thursday’s opinion “to determine what it means and whatever steps we need to take,” but is confident that Windows XP will be shipped as planned on Oct. 25.

In other words, consumers and competitors alike should expect an operating system that will more prominently link to Microsoft’s online services and include more of the company’s products.

Windows XP is expected to include Microsoft versions of such things as an exclusive instant messaging system, videoconferencing, and media recording and playback software.

That is what competitors and some of the 19 state attorneys general who originally brought suit against Microsoft complained about, and are threatening to make an issue again with Windows XP.

But Microsoft said it now has legal grounds to forge ahead with its plans.

“There’s nothing in the ruling that changes our plans for our products, including Windows XP,” chairman Bill Gates said Thursday. The ruling, he said, reaffirms “the kind of approach we’ve always had, and we’re continuing without interruption.”

A unanimous federal appeals court Thursday overturned the court-ordered breakup of Microsoft but upheld the trial judge’s finding that the software giant violated antitrust laws by muscling hardware and software companies into giving its operating systems preferential treatment.

The court sent the case to a new judge to decide whether a breakup or some other penalty is warranted.

Legal experts said that while the ruling offered some vindication for Microsoft, it also set the stage for further court action.

“Microsoft’s ability to contest that it’s a monopolist has been seriously eroded,” said Howard University law professor Andy Gavil.

Even if a settlement is reached, Gavil said, Microsoft’s rivals could use the appeals court finding as a basis to take Microsoft to task again over Windows XP.

“The complaints from competitors are out there that Microsoft is using the same strategy,” he said.

Microsoft has been a vigorous defender of its right to incorporate features, arguing that consumers ask for and use the features the company continually adds to its operating systems.

But a day before the ruling was announced, Microsoft dropped plans to include a controversial new feature called Smart Tags into Windows XP. The feature would have directed Web page readers to other sites without the permission — or even knowledge — of the page’s owner, through a Web link set up by the Internet Explorer browser.

Cullinan said the company decided to abandon the feature for now based on customer response, but would not elaborate.

That decision appeared to be a minor point in Microsoft’s grander Internet plans, however.

“I don’t think this company has any fear when it comes to doing whatever it wants in the marketplace,” said George Cumming, an antitrust expert with a law firm in San Francisco. “They worry about paying damages and getting broken up after the fact.”