Microsoft scored an important victory in its anti-trust battle last week when the US Court of Appeal threw out an injunction banning the bundling of Internet Explorer with Windows 95.
In a 2:1 majority verdict, the appeal judges said IE could be bundled with the Windows 95 operating system because it benefits consumers, which was Microsoft's argument all along (See Leader, page 28).
The ruling came as a blow to the Department of Justice (DoJ) and the 20 states pitted against the software giant, because it may affect the broader anti-trust case against Microsoft which goes to court in September.
"Basically the justice department had a three-legged stool and one leg just got chopped off," said Frederic Marx, a lawyer at US legal firm Hemenway & Barnes.
"It was a big win, because the court gave an indication of what it will do in the future," he continued. "The court made it clear it does not want to get into the question of what components are inside a product, which really goes to the heart and soul of many of the arguments the government is bringing up."
However, one of the DoJ's contentions that remains intact is Microsoft's licensing agreements with OEMs. As part of the broader anti-trust suit, the DoJ may try to force Microsoft to allow OEMs to make systems with their own interface or shell. Microsoft currently forbids this in its licensing contracts. Marx said: "The shells thing is still very much alive, because the tying arrangements, part of the broader anti-trust suit, were untouched."
Dataquest analyst Chris LeTocq said: "Microsoft saw (the shells) as a very real threat to its image and success in making Windows the interface, and took steps to kill them. Sure, they were starting to be obsolete, but I am sure Microsoft didn't want to risk anything."
Microsoft did not deny changing the OEM contracts, but claimed it did so in response to customer requests.
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