Microsoft marks 10 years of antitrust action
Published: 14 Apr 2004 12:30 BST
None of this has appeared to be a significant financial drain on a company with more than $52bn in cash and short-term investments. Some experts say the costs have simply become a part of doing business for the company.
"If you incur a fine of a billion dollars, but it protects that monopoly, that might be worth it from a pure dollars-and-cents perspective," said Carl Shapiro, a professor at the University of California Berkeley's Haas School of Business, who once testified for the Justice Department in its case against Microsoft. "What's the Windows franchise worth?"
So far, shareholders have been mute, but the stock has traded in a tight range as Microsoft continues to write one nine-digit check after another. The company's shares now trade at about $25, essentially unchanged from a year ago. Meanwhile, the Nasdaq has climbed about 40 percent in 12 months, though the Nasdaq tumbled much further during the tech bust than Microsoft did.
However, Microsoft spokesman said the company has changed its behaviour, particularly after the settlement with the US government. The company has since instituted extensive training and a legal review process before new products are released, the spokesman said.
"I think throughout (the company's life), we have worked very hard to conduct ourselves in a way that is fully compliant with all laws and regulations," Microsoft spokesman Jim Desler said.
But what exactly is compliance? In a recent interview with CNET News.com, Microsoft chief executive Steve Ballmer explained that the consent decree with the Department of Justice "says we can do, from a product design standpoint, most anything we think is appropriate. But we have to do it with certain obligations for flexibility, publishing, etc. Between the district court and the appellate court, there is some notion of what they call a 'rule of reason' -- that is, what we are doing has to be better for consumers than it is bad for competitors."
Asked whether the "rule of reason" test would have prevented Microsoft from bundling the browser, which is the issue at the heart of the Justice Department's antitrust lawsuit, Ballmer was adamant: "I would still integrate a browser. We would still integrate the Media Player... Nobody ever said the browser did not meet the rule-of-reason test. It absolutely met the rule-of-reason test to go in."
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