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June 30, 2004

APPEALS COURT APPROVES MICROSOFT SETTLEMENT
HIGHLIGHTS
  • U.S. Court of Appeals unanimously supports settlement in antitrust case
  • Arguments of Massachusetts and two trade organizations rejected
  • Settlement determined to be in the public interest
APPEALS COURT REJECTS MASSACHUSETTS’ ARGUMENTS
Earlier today, in a unanimous ruling, a six-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit rejected Massachusetts’ call for tougher sanctions against Microsoft in the historic antitrust case. The ruling affirmed the U.S. District Court’s approval of the settlement that Microsoft reached with the U.S. Department of Justice and other litigating states.

“Of all the steps we’ve taken over the past two years, this is the most important step in resolving our legal issues and moving forward. Today’s unanimous decision sends a clear and emphatic message that the settlement reached two years ago is a fair and appropriate resolution of these issues,” said Brad Smith, senior vice president and general counsel at Microsoft.

The court also rejected claims made by the Computer and Communications Industry Association (CCIA) and Software and Information Industry Association (SIIA) -- both largely representing Microsoft’s rivals -- that the settlement was not in the public interest. The court wrote, “We find no merit in any of CCIA’s and SIIA’s objections.”

Read the ruling at: http://pacer.cadc.uscourts.gov/docs/common/opinions/200406/02-7155a.pdf

BACKGROUND: MASSACHUSETTS WAS LAST REMAINING GOVERNMENT LITIGANT IN U.S. ANTITRUST CASE
In November 2001, the U.S. Department of Justice and nine states agreed to a settlement with Microsoft in the historic antitrust case that began in 1998. In November 2002, U.S. District Court Judge Colleen Kollar-Kotelly issued her Final Judgment, which largely approved the terms of the settlement and rejected calls for more punitive measures. Seven other states and the District of Columbia accepted this ruling, leaving West Virginia and Massachusetts as the only remaining government litigants. West Virginia later dropped its appeal. Two trade associations, the Computer and Communications Industry Association (CCIA) and Software and Information Industry Association (SIIA), also filed appeals, calling for tougher sanctions against Microsoft.

MICROSOFT’S COMMITMENT TO COMPLIANCE
The terms of the settlement have required Microsoft to make significant changes in how it develops, licenses and markets its software; works with independent software vendors; and communicates about the inner workings of its software with partners and competitors. The company has trained employees to ensure that the settlement is understood by all and followed in every part of the business. Compliance is both a fundamental corporate commitment and a personal responsibility for everyone at Microsoft.

COURT AFFIRMS THAT SETTLEMENT IS WORKING
U.S. District Court Judge Colleen Kollar-Kotelly continues to hold quarterly status conferences to monitor Microsoft’s compliance with the settlement of the case. In the conference held in January 2004, the judge said that the settlement was working “as envisioned.” In the April conference, Microsoft announced an extension of the communications protocol licensing program for two years beyond the expiration of the antitrust settlement, and Judge Kollar-Kotelly noted that there had been “continuing progress” with this program. The next status conference takes place on July 19.

For more information about the antitrust case and technology policy news, visit the FIN Web site at: http://www.microsoft.com/freedomtoinnovate/ for more Microsoft news and technology policy information.

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