Mixed report on Microsoft's settlement compliance

State and federal watchdogs think Microsoft is making progress toward its antitrust obligations, but they have received several new complaints from the industry, according to a status report filed yesterday.

The report said there were two "substantive" new complaints about Microsoft's compliance with the settlement, which was approved in 2002 and directs the company to share technology and equitably license its software to computer manufacturers.

Yesterday's report was filed with U.S. District Court Judge Colleen Kollar-Kotelly, who oversaw the settlement and is monitoring its outcome. She's scheduled to discuss the issues at a July 19 hearing in Washington, D.C.

Two weeks ago, the U.S. Court of Appeals reaffirmed the settlement, denying an appeal by the state of Massachusetts. That leaves it up to Kollar-Kotelly to be sure Microsoft complies with the measures intended to restore competition to the industry.

"We're encouraged by the steps that have been taken, but we still have serious concerns about making sure the consent decree is properly and fully implemented," said Tom Dresslar, a spokesman for California Attorney General Bill Lockyer.

The report also disclosed that antitrust overseers are also turning their focus to Microsoft's upcoming products. They are looking into the new version of Windows code-named Longhorn that's due in 2006 or later, and testing a Windows XP update kit scheduled for release this year.

Technical experts retained by the parties have "engaged in a dialogue with Microsoft developers" to be sure Longhorn enables users to hide Microsoft's Internet browser and media player and substitute competing products.

Microsoft spokeswoman Stacy Drake said the report "demonstrates the thorough oversight of our compliance efforts, as well as the constructive and open dialogue" with state attorneys general and the U.S. Department of Justice.

Drake said the company welcomes oversight and testing and adding this step has not contributed to the delay of the XP update kit, known as Service Pack 2.

"All development at Microsoft is done with full consideration and understanding of our obligations and commitments under the consent decree and final judgments," she said.

The report said Microsoft has improved its process for sharing technology. It also disclosed that in response to concerns about how long it took to set up that process, Microsoft extended the sharing program by two years, until 2009 or the release of its next major server software product release, whichever comes first.

But the report raised concerns about the inability of the company to reach a sharing agreement with Sun Microsystems, a key competitor. Drake said the Sun agreement may be sorted out "shortly."

The report also noted that a group of states, including California, has hired a specialist to examine the technical support documents Microsoft is providing to companies that obtain licenses.

At issue is software code that makes programs work better with Microsoft's dominant Windows operating system. The settlement directs Microsoft to share this code, so the company won't have an unfair advantage developing new products.

So far 17 companies have licensed the technology, including three new licencees since the last status report, filed in April.

Details were not given about the two recently received complaints, but one deals with the provision affecting the browser and media-player settings. The other deals with third-party software interoperability.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com

Japan expected to warn but not fine Microsoft

TOKYO — In a largely symbolic move, Japan's trade watchdog will issue a warning against Microsoft next week, but likely won't fine the software giant, a commission official said yesterday.

Microsoft has been under investigation on suspicion of violating the country's anti-monopoly law. The Fair Trade Commission official, speaking on condition of anonymity, would provide no other details.

The commission raided Microsoft's Japan offices in February as part of an investigation into the company's contracts with manufacturers, which allegedly contained restrictive conditions that would prevent patent infringement lawsuits.

Microsoft said it has omitted the conditions from new contracts. However, Microsoft maintains that the disputed provisions are legal under Japanese, U.S. and European Union law, said Kazushi Okabe, a Microsoft spokesman in Tokyo.

— The Associated Press

AltaVista hacker works at Microsoft

SEATTLE — A man accused of hacking into search-engine company AltaVista's computer systems about two years ago now works at Microsoft, the company said yesterday.

Laurent Chavet, 29, was arrested by FBI agents a week ago in Redmond, acting on a warrant issued in San Francisco. The U.S. attorney's office for the Northern District of California alleges that Chavet hacked into AltaVista's computer system to obtain software blueprints called source code and recklessly caused damage to AltaVista's computers.

Except to confirm that Chavet worked at Microsoft, spokeswoman Tami Begasse declined to comment further, citing a company policy not to discuss personnel matters.

But in general, she said, "We're confident in our policies and procedures we have in place to protect our code and to ensure that employees do not bring third-party code into the workplace."

In a research paper on search technology published in IBM Systems Journal, Chavet is listed as a search expert who works at Microsoft and was previously with AltaVista.

— The Associated Press