Microsoft’s anti-trust settlements may top US$4.5B

Microsoft has spent more than $3 billion settling antitrust litigation over the past 18 months, and its total bill for settling claims could exceed US$4.5 billion.

As it strives to dispose of its remaining antitrust litigation in the United States and reach a final settlement with the European Commission, the software giant announced a $536 million antitrust settlement with rival Novell plus a wide-ranging agreement to cooperate with the Computer & Communications Industry Association (CCIA), an industry trade association that has long opposed Microsoft.
 
As part of those deals, Novell will release its antitrust claims against Microsoft under U.S. law related to NetWare, as well as withdraw from participation in the European Commission's case against Microsoft.

In addition, Novell and the CCIA will no longer participate as interveners on behalf of the European Commission in Microsoft's appeal of the commission's March 24 ruling, which imposed a hefty fine on Microsoft and an order to open more of its protocols to competitors and ship a version of its Windows operating system without the Windows Media Player digital media application.

Brad Smith, Microsoft's chief legal counsel, acknowledged on Monday that the software giant is intent on resolving all of its antitrust litigation as soon as possible and hopes that the Novell and CCIA agreements will pave the way for a settlement with the European Commission.

Those deals are just the latest in a string of agreements Microsoft has made during the past year and a half to exit its painful "antitrust era," which began roughly six years ago in the United States and resulted in guilty verdicts at home and in Europe.

Though Microsoft has evaded a potential breakup and Windows redesign, the company has amassed a hefty bill in settling antitrust offences.

Since mid-2003, Microsoft has paid out just less than US$3 billion to settle claims with four entities, including AOL Time Warner (US$750 million), Sun Microsystems (US$700 million) and now Novell (US$536 million).

Microsoft also paid $1 billion to settle more than a dozen state class-action lawsuits related to the main antitrust case, and its top attorney said it's "reasonably possible" that the company might have to pay another $950 million for other class-action claims.

Altogether, that would bring Microsoft's settlements tab to nearly US$4 billion. The total represents half of Microsoft's total profit for its 2004 fiscal year, which reached US$8 billion.

What's more, that figure doesn't take into account the legal fees that Microsoft has shelled out to law firms over the past decade, nor does it include the whopping US$617 million fine Microsoft paid to the European Commission earlier this year.

As Microsoft works to get the court to overturn the commission's remedies, one former Novell solution provider said it was a good move for the software giant to settle with Novell.

"Novell and its SuSE Linux product have a much stronger presence in Europe. It was probably better for Microsoft to pay Novell now vs. [paying] more to the European Commission later if Novell stayed in the litigation game," said the solution provider, who requested anonymity.

Microsoft is digging down deep into its pockets to put the litigation behind it and try to jump-start the software business, which has slowed considerably since the antitrust case, industry observers and channel partners say.