4 July 2003 Microsoft is facing a fresh legal assault from the US Department of Justice (DoJ) after being accused of failing to comply with key terms of last year’s antitrust settlement.
In a report to a federal judge yesterday, the DoJ said that it “remained concerned” about the way that Microsoft proposed opening up some of the inner code of the Windows operating system to software developers.
Under the terms of the anti-trust settlement, Microsoft is obliged to open up its “middleware” — application programming interfaces (APIs) and other elements of the operating system that help developers write software — to enable third parties to more easily write applications.
The provision was born out of fears that Microsoft’s control of the Windows desktop and server environments gave it an unfair advantage in developing applications for it.
However, software vendors have complained to the DoJ that the terms under which Microsoft is proposing to licence the code is unreasonable. For example, would-be licensees were required to sign a non-disclosure agreement before they were even able to read the licence. Other terms “could have deterred prospective licensees who choose to work with the open source community”, according to the DoJ.
Although Microsoft has said that it is “discussing and considering” changes to its licensing terms, vendors complain that it is still not going far enough, despite a reduction in fees announced in April.
Microsoft defended its stance by suggesting that it considered its prices “reasonable” in view of the amount of work that had gone into the development of the software.
Under the terms of last year’s antitrust settlement, Microsoft is obliged to licence its Windows “middleware” protocols on “reasonable and non-discriminatory terms”.
At the same time, Microsoft chief financial officer John Connors is reported to be considering making the biggest dividend payment in corporate history by distributing some $10 billion of Microsoft’s cash pile back to stockholders.
Among the options being considered is a one-off payment spread over three or four quarters, according to a report in the Les Echos. Earlier this year, Microsoft announced that it would start paying dividends for the first time in its 28 year history, amounting to some $900 million.
Microsoft generates some $3 billion of cash every quarter — making it more profitable than the next largest 49 software companies put together.
Les Echos’ source also raised the prospect of Microsoft using the cash to make a “momentous” acquisition — $10 billion would be enough to buy both PeopleSoft and JD Edwards and still leave change of about $2 billion.