[Federal Register Volume 66, Number 229 (Wednesday, November 28, 2001)]
[Notices]
[Pages 59452-59476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29498]



[[Page 59452]]

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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Microsoft Corporation; Revised Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. section 16(b) through (h), that a revised 
proposed Final Judgment, Stipulation and Competitive Impact Statement 
have been filed with the United States District Court for the District 
of Columbia in United States of American v. Microsoft Corporation, 
Civil Action No. 98-1232. On May 18, the United States filed a 
Complaint alleging that Microsoft, the world's largest supplier of 
computer software for personal computers, restrained competition in 
violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. 1-2. 
Following a 7-day trial in late 1998 and early 1999, the United States 
District Court found that Microsoft had violated both sections 1 and 2 
of the Sherman Act. On appeal, the United States Court of Appeals for 
the District of Columbia unanimously affirmed portions of the district 
court's finding and conclusion that Microsoft illegally maintained its 
operating system monopoly in violation of section 2 of the Sherman Act, 
but reversed and remanded other portions of the district court's 
determinations. Specifically, the court of appeals reversed the 
district court's determination that Microsoft violated section 2 by 
illegally attempting to monopolize the Internet browser market and 
remanded the district court's determination that Microsoft violated 
section 1 of the Sherman Act by unlawfully tying its browser to its 
operating system. The court of appeals also vacated the district 
court's remedial order, including its order that Microsoft be split 
into separate operating systems and applications businesses, and 
remanded the case to a new district court judge for further 
proceedings. Following intensive mediation efforts, the United States 
and Microsoft subsequently reached the agreement embodied in the 
revised proposed Final Judgment, which would impose injunctive relief 
to enjoin continuance and prevent recurrence of the violations of the 
Sherman Act by Microsoft that were upheld by the court of appeals.
    The revised proposed Final Judgment, filed November 6, 2001, will 
stop recurrence of Microsoft's unlawful conduct, prevent recurrence of 
similar conduct in the future and restore competitive conditions in the 
personal computer operating system market by, among other things, 
prohibiting actions by Microsoft to prevent computer manufacturers and 
others from developing, distributing or featuring middlewear products 
that are threats to Microsoft's operating system monopoly; creating the 
opportunity for independent software vendors to develop products that 
will be competitive with Microsoft's middleware products; requiring 
Microsoft to disclose interfaces in order to ensure that competing 
middlewear and server software can interoperate with Microsoft's 
operating systems; ensuring full compliance with the revised proposed 
Final Judgment; and providing for swift resolution of technical 
disputes. Copies of the Complaint, revised proposed Final Judgment and 
Competitive Impact Statement are available for inspection at the 
Department of Justice in Washington, DC at Antitrust Documents Group, 
325 7th Street NW., Ste. 215 North, Washington, DC 20530 (please call 
202-514-2481, for appointments only), on the Department of Justice web 
site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the 
United States District Court for the District of Columbia, 333 
Constitution Avenue, NW., Washington, DC 20002.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Renata Hesse, Trial Attorney, Suite 1200, Antitrust Division, 
Department of Justice, 601 D Street NW, Washington, DC 20530; 
(facsimile) 202-616-9937 or 202-307-1545; or e-mail 
[email protected]. While comments may also be sent by regular 
mail, in light of recent events affecting the delivery of all types of 
mail to the Department of Justice, including U.S. Postal Service and 
other commercial delivery services, and current uncertainties 
concerning when the timely delivery of this mail may resume, the 
Department strongly encourages, whenever possible, that comments be 
submitted via email or facsimile.

Constance K. Robinson,
Director of Operations & Merger Enforcement.

United States District Court for the District of Columbia

United States of America, Plaintiff, vs. Microsoft Corporation, 
Defendant

[Civil Action No. 98-1232 (CKK)]

State of New York ex rel. Attorney General Eliot Spitzer, et al., 
Plaintiffs, vs. Microsoft Corporation, Defendant

[Civil Action No. 98-1233 (CKK)]

    Next Court Deadline: November 6, 2001, Status Conference.

Stipulation

    Plaintiffs United States of America (``United States'') and the 
States of New York, Ohio, Illinois, Kentucky, Louisiana, Maryland, 
Michigan, North Carolina and Wisconsin and Defendant Microsoft 
Corporation (``Microsoft''), by and through their respective attorneys, 
having agreed to the entry of this Stipulation, it is hereby stipulated 
and agreed that:
    1. A Final Judgment in the form attached hereto may be filed and 
entered by the Court, upon the motion of any party or upon the Court's 
own motion, at any time after compliance with the requirements of the 
Antitrust Procedures and Penalties Act, 15 U.S.C. 16, and without 
further notice to any party or other proceedings, provided that the 
United States has not withdrawn its consent, which it may do at any 
time before the entry of the revised proposed Final Judgment by serving 
notice thereof on Microsoft and by filing that notice with the Court.
    2. Unless otherwise provided in the revised proposed Final 
Judgment, Microsoft shall begin complying with the revised proposed 
Final Judgment as it was in full force and effect starting on December 
16, 2001. Subject to the foregoing, Microsoft agrees to be bound by the 
provisions of the revised proposed Final Judgment pending its entry by 
the Court. If the United States withdraws its consent, or if (a) the 
revised proposed Final Judgment is not entered pursuant to the terms of 
the Stipulation, (b) the time has expired for all appeals of any Court 
ruling declining to enter the revised proposed Final Judgment, and (c) 
the Court has not otherwise ordered continued compliance with the terms 
and provisions of the revised proposed Final Judgment, then all of the 
parties shall be released from all further obligations under this 
Stipulation, and the making of this Stipulation shall be without

[[Page 59453]]

prejudice to any party in this or any other proceeding.
    3. Pursuant to 15 U.S.C. 16(g), within ten (10) days of the 
submission of the revised proposed Final Judgment, Microsoft will file 
with the Court a description of any and all written or oral 
communications by or on behalf of Microsoft, or other person, with any 
officer or employee of the United States concerning or relevant to the 
revised proposed Final Judgment, except that any such communications 
made by counsel of record alone with the Attorney General or the 
employees of the United States Department of Justice alone shall be 
excluded from this requirement.
    4. Pursuant to 15 U.S.C. 16(b), on or before November 16, 2001, the 
United States will file with the Court a Competitive Impact Statement 
explaining the terms of the revised proposed Final Judgment. The United 
States will publish the revised proposed Final Judgment and Competitive 
Impact Statement in the Federal Register.
    5. The United States will publish a notice informing the public of 
the revised proposed Final Judgment and public comment period in the 
Washington Post and the San Jose Mercury News, for seven days over a 
period of two weeks commencing no later than November 15, 2001.
    6. Members of the public may submit written comments about the 
revised proposed Final Judgment to a designated official of the 
Antitrust Division of the United States Department of Justice for a 
period of 60 days after publication of the revised proposed Final 
Judgment and Competitive Impact Statement in the Federal Register.
    7. Within 30 days after the close of the 60-day public comment 
period, the United States will file with the Court and publish in the 
Federal Register any comments it receives and its response to those 
comments.
    8. Once the aforementioned procedures have been complied with, the 
United States will file with the Court a certification of compliance 
with the requirements of 15 U.S.C. 16, and a Motion for Entry of 
Revised Proposed Final Judgment, unless it withdraws its consent to 
entry of the revised proposed Final Judgment pursuant to paragraph 2, 
above. At any time thereafter, and at the conclusion of any further 
proceedings ordered by the court pursuant to 15 U.S.C. 16(f), the Court 
may then enter the revised proposed Final Judgment, provided that the 
Court determines that entry of the revised proposed Final Judgment will 
serve the public interest.

    Dated this 6th day of November, 2001.

    For Plaintiff the United States of America:

Charles A. James (Bar No. 292201),
Assistant Attorney General, Antitrust Division, United States 
Department of Justice, 901 Pennsylvania Avenue, NW., Washington, DC 
20530, (202) 514-2401.

    For Plaintiffs the States of New York, Ohio, Illinois, Kentucky, 
Louisiana, Maryland, Michigan, North Carolina and Wisconsin:

Eliot Spitzer,
Attorney General of New York, 120 Broadway, New York, New York 
10271, (212) 416-8282.

    For Defendant Microsoft Corporation:

John L. Warden (Bar No. 222083),
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004, 
(212) 558-4000.

Revised Proposed Final Judgment

    Whereas, plaintiffs United States of America (``United States'') 
and the States of New York, Ohio, Illinois, Kentucky, Louisiana, 
Maryland, Michigan, North Carolina and Wisconsin and defendant 
Microsoft Corporation (``Microsoft''), by their respective attorneys, 
have consented to the entry of this Final Judgment;
    And Whereas, this Final Judgment does not constitute any admission 
by any party regarding any issue of fact or law;
    And Whereas, Microsoft agrees to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    Now Therefore, upon remand from the United States Court of Appeals 
for the District of Columbia Circuit, and upon the consent of the 
aforementioned parties, it is hereby
    Ordered, Adjudged, and Decreed:

I. Jurisdiction

    This Court has jurisdiction of the subject matter of this action 
and of the person of Microsoft.

II. Applicability

    This Final Judgment applies to Microsoft and to each of its 
officers, directors, agents, employees, subsidiaries, successors and 
assigns; and to all other persons in active concert or participation 
with any of them who shall have received actual notice of this Final 
Judgment by personal service or otherwise.

III. Prohibited Conduct

    A. Microsoft shall not retaliate against an OEM by altering 
Microsoft's commercial relations with that OEM, or by withholding newly 
introduced forms of non-monetary Consideration (including but not 
limited to new versions of existing forms of non-monetary 
Consideration) from that OEM, because it is known to Microsoft that the 
OEM is or is contemplating:
    1. Developing, distributing, promoting, using, selling, or 
licensing any software that competes with Microsoft Platform Software 
or any product or service that distributes or promotes any Non-
Microsoft Middleware;
    2. Shipping a Personal Computer that (a) includes both a Windows 
Operating System Product and a non-Microsoft Operating System, or (b) 
will boot with more than one Operating System; or
    3. Exercising any of the options or alternatives provided for under 
this Final Judgment.
    Nothing in this provision shall prohibit Microsoft from enforcing 
any provision of any license with any OEM or any intellectual property 
right that is not inconsistent with this Final Judgment. Microsoft 
shall not terminate a Covered OEM's license for a Windows Operating 
System Product without having first given the Covered OEM written 
notice of the reasons for the proposed termination and not less than 
thirty days' opportunity to cure. Notwithstanding the foregoing, 
Microsoft shall have no obligation to provide such a termination notice 
and opportunity to cure to any Covered OEM that has received two or 
more such notices during the term of its Windows Operating System 
Product license.
    Nothing in this provision shall prohibit Microsoft from providing 
Consideration to any OEM with respect to any Microsoft product or 
service where that Consideration is commensurate with the absolute 
level or amount of that OEM's development, distribution, promotion, or 
licensing of that Microsoft product or service.
    B. Microsoft's provision of Windows Operating System Products to 
Covered OEMs shall be pursuant to uniform license agreements with 
uniform terms and conditions. Without limiting the foregoing, Microsoft 
shall charge each Covered OEM the applicable royalty for Windows 
Operating System Products as set forth on a schedule, to be established 
by Microsoft and published on a web site accessible to the Plaintiffs 
and all Covered OEMs, that provides for uniform royalties for Windows 
Operating System Products, except that:
    1. The schedule may specify different royalties for different 
language versions;
    2. The schedule may specify reasonable volume discounts based upon 
the actual volume of licenses of any Windows Operating System Product 
or any group of such products; and
    3. The schedule may include market development allowances, 
programs, or other discounts in connection with Windows Operating 
System Products, provided that:

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    a. Such discounts are offered and available uniformly to all 
Covered OEMs, except that Microsoft may establish one uniform discount 
schedule for the ten largest Covered OEMs and a second uniform discount 
schedule for the eleventh through twentieth largest Covered OEMs, where 
the size of the OEM is measured by volume of licenses;
    b. Such discounts are based on objective, verifiable criteria that 
shall be applied and enforced on a uniform basis for all Covered ;s, 
and
    c. Such discounts or their award shall not be based on or impose 
any criterion or requirement that is otherwise inconsistent with any 
portion of this Final Judgment.
    C. Microsoft shall not restrict by agreement any OEM licensee from 
exercising any of the following options or alternatives:
    1. Installing, and displaying icons, shortcuts, or menu entries 
for, any Non-Microsoft Middleware or any product or service (including 
but not limited to IAP products or services) that distributes, uses, 
promotes, or supports any Non-Microsoft Middleware, on the desktop or 
Start menu, or anywhere else in a Windows Operating System Product 
where a list of icons, shortcuts, or menu entries for applications are 
generally displayed, except that Microsoft may restrict an OEM from 
displaying icons, shortcuts and menu entries for any product in any 
list of such icons, shortcuts, or menu entries specified in the Windows 
documentation as being limited to products that provide particular 
types of functionality, provided that the restrictions are non-
discriminatory with respect to non-Microsoft and Microsoft products.
    2. Distributing or promoting Non-Microsoft Middleware by installing 
and displaying on the desktop shortcuts of any size or shape so long as 
such shortcuts do not impair the functionality of the user interface.
    3. Launching automatically, at the conclusion of the initial boot 
sequence or subsequent boot sequences, or upon connections to or 
disconnections from the Internet, any Non-Microsoft Middleware if a 
Microsoft Middleware Product that provides similar functionality would 
otherwise be launched automatically at that time, provided that any 
such Non-Microsoft Middlware displays on the desktop no user interface 
or a user interface of similar size and shape to the user interface 
displayed by the corresponding Microsoft Middleware Product.
    4. Offering users the option of launching other Operating Systems 
from the Basic Input/Output System or a non-Microsoft boot-loader or 
similar program that launches prior to the start of the Windows 
Operating System Product.
    5. Presenting in the initial boot sequence its own IAP offer 
provided that the OEM complies with reasonable technical specifications 
established by Microsoft, including a requirement that the end user be 
returned to the initial boot sequence upon the conclusion of any such 
offer.
    6. Exercising any of the options provided in Section III.H of this 
Final Judgment.
    D. Starting at the earlier of the release of Service Pack I for 
Windows XP or 12 months after the submission of this Final Judgment to 
the Court, Microsoft shall disclose to ISVs, IHVs, IAPs, ICPs, and 
OEMs, for the sole purpose of interoperating with a Windows Operating 
System Product, via the Microsoft Developer Network (``MSDN'') or 
similar mechanisms, the APIs and related Documentation that are used by 
Microsoft Middlware to interoperate with a Windows Operating System 
Product. In the case of a new major version of Microsoft Middleware, 
the disclosures required by this Section III.D shall occur no later 
than the last major beta test release of that Microsoft Middleware. In 
the case of a new version of a Windows Operating System Product, the 
obligations imposed by this Section III.D shall occur in a Timely 
Manner.
    E. Starting nine months after the submission of this proposed Final 
Judgment to the Court, Microsoft shall make available for use by third 
parties, for the sole purpose of interoperating with a Windows 
Operating System Product, on reasonable and non-discriminatory terms 
(consistent with Section III.I), any Communications Protocol that is, 
on or after the date this Final Judgment is submitted to the Court, (i) 
implemented in a Windows Operating System Product installed on a client 
computer, and (ii) used to interoperate natively (i.e., without the 
addition of software code to the client operating system product) with 
a Microsoft server operating system product.
    F. 1. Microsoft shall not retaliate against any ISV or IHV because 
of that ISV's or IHV's:
    a. Developing, using, distributing, promoting or supporting any 
software that competes with Microsoft Platform Software or any software 
that runs on any software that competes with Microsoft Platform 
Software, or
    b. Exercising any of the options or alternatives provided for under 
this Final Judgment.
    2. Microsoft shall not enter into any agreement relating to a 
Windows Operating System Product that conditions the grant of any 
Consideration on an ISV's refraining from developing, using, 
distributing, or promoting any software that competes with Microsoft 
Platform Software or any software that runs on any software that 
competes with Microsoft Platform Software, except that Microsoft may 
enter into agreements that place limitations on an ISV's development, 
use, distribution or promotion of any such software if those 
limitations are reasonably necessary to and of reasonable scope and 
duration in relation to a bona fide contractual obligation of the ISV 
to use, distribute or promote any Microsoft software or to develop 
software for, or in conjunction with, Microsoft.
    3. Nothing in this section shall prohibit Microsoft from enforcing 
any provision of any agreement with any ISV or IHV, or any intellectual 
property right, that is not inconsistent with this Final Judgment.
    G. Microsoft shall not enter into any agreement with:
    1. Any IAP, ICP, ISV, IHV or OEM that grants Consideration on the 
condition that such entity distributes, promotes, uses, or supports, 
exclusively or in a fixed percentage, any Microsoft Platform Software, 
except that Microsoft may enter into agreements in which such an entity 
agrees to distribute, promote, use or support Microsoft Platform 
Software in a fixed percentage whenever Microsoft in good faith obtains 
a representation that it is commercially practicable for the entity to 
provide equal or greater distribution, promotion, use or support for 
software that competes with Microsoft Platform Software, or
    2. Any IAP or ICP that grants placement on the desktop or elsewhere 
in any Windows Operating System Product to that IAP or ICP on the 
condition that the IAP or ICP refrain from distributing, promoting or 
using any software that competes with Microsoft Middleware.
    Nothing in this section shall prohibit Microsoft from entering into 
(a) any bona fide joint venture or (b) any joint development or joint 
services arrangement with any ISV, IHV, IAP, ICP, or OEM for a new 
product, technology or service, or any material value-add to an 
existing product, technology or service, in which both Microsoft and 
the ISV, IHV, IAP, ICP, or OEM contribute significant developer or 
other resources, that prohibits such entity from competing with the 
object of

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the joint venture or other arrangement for a reasonable period of time.
    This Section does not apply to any agreements in which Microsoft 
licenses intellectual property in from a third party.
    H. Starting at the earlier of the release of Service Pack 1 for 
Windows XP or 12 months after the submission of this Final Judgment to 
the Court, Microsoft shall:
    1. Allow end users (via a mechanism readily accessible from the 
desktop or Start menu such as an Add/Remove icon) and OEMs (via 
standard preinstallation kits) to enable or remove access to each 
Microsoft Middleware Product or Non-Microsoft Middleware Product by (a) 
displaying or removing icons, shortcuts, or menu entries on the desktop 
or Start menu, or anywhere else in a Windows Operating System Product 
where a list of icons, shortcuts, or menu entries for applications are 
generally displayed, except that Microsoft may restrict the display of 
icons, shortcuts, or menu entries for any product in any list of such 
icons, shortcuts, or menu entries specified in the Windows 
documentation as being limited to products that provide particular 
types of functionality, provided that the restrictions are non-
discriminatory with respect to non-Microsoft and Microsoft products; 
and (b) enabling or disabling automatic invocations pursuant to section 
III.C.3 of this Final Judgment that are used to launch Non-Microsoft 
Middleware Products or Microsoft Middleware Products. The mechanism 
shall offer the end user a separate and unbiased choice with respect to 
enabling or removing access (as described in this subsection III.H.1) 
and altering default invocations (as described in the following 
subsection III.H.2) with regard to each such Microsoft Middleware 
Product or Non-Microsoft Middleware Product and may offer the end-user 
a separate and unbiased choice of enabling or removing access and 
altering default configurations as to all Microsoft Middleware Products 
as a group or all Non-Microsoft Middleware Products as a group.
    2. Allow end users (via a mechanism readily available from the 
desktop or Start menu), OEMs (via standard OEM preinstallation kits), 
and Non-Microsoft Middleware Products (via a mechanism which may, at 
Microsoft's option, require confirmation from the end user) to 
designate a Non-Microsoft Middleware Product to be invoked in place of 
that Microsoft Middleware Product (or vice versa) in any case where the 
Windows Operating System Product would otherwise launch the Microsoft 
Middleware Product in a separate Top-Level Window and display either 
(i) all of the user interface elements or (ii) the Trademark of the 
Microsoft Middleware Product.
    3. Ensure that a Windows Operating System Product does not (a) 
automatically alter an OEM's configuration of icons, shortcuts or menu 
entries installed or displayed by the OEM pursuant to section III.C of 
this Final Judgment without first seeking confirmation from the user 
and (b) seek such confirmation from the end user for an automatic (as 
opposed to user-initiated) alteration of the OEM's configuration until 
14 days after the initial boot up of a new Personal Computer. Microsoft 
shall not alter the manner in which a Windows Operating System Product 
automatically alters an OEM's configuration of icons, shortcuts or menu 
entries other than in a new version of a Windows Operating System 
Product.
    Notwithstanding the foregoing Section III.H.2, the Windows 
Operating System Product may invoke a Microsoft Middleware product in 
any instance in which:
    1. That Microsoft Middleware Product would be invoked solely for 
use in interoperating with a server maintained by Microsoft (outside 
the context of general Web browsing), or
    2. That designated Non-Microsoft Middleware Product fails to 
implement a reasonable technical requirement (e.g., a requirement to be 
able to host a particular Active X control) that is necessary for valid 
technical reasons to supply the end user with functionality consistent 
with a Windows Operating System Product, provided that the technical 
reasons are described in a reasonably prompt manner to any ISV that 
requests them.
    Microsoft's obligations under this section III.H as to any new 
Windows Operating System Product shall be determined based on the 
Microsoft Middleware Products which exist seven months prior to the 
last beta test version (i.e., the one immediately preceding the first 
release candidate) of that Windows Operating System Product.
    I. Microsoft shall offer to license to ISVs, IHVs, IAPs, ICPs, and 
OEMs any intellectual property rights owned or licensable by Microsoft 
that are required to exercise any of the options or alternatives 
expressly provided to them under this Final Judgment, provided that:
    1. All terms, including royalties or other payment of monetary 
consideration, are reasonable and non-discriminatory;
    2. The scope of any such license (and the intellectual property 
rights licensed thereunder) need be no broader than is necessary to 
ensure that an ISV, IHV, IAP, ICP or OEM is able to exercise the 
options or alternatives expressly provided under this Final Judgment 
(e.g., an ISV's, IHV's, IAP's, ICP's and OEM's option to promote Non-
Microsoft Middleware shall not confer any rights to any Microsoft 
intellectual property rights infringed by that Non-Microsoft 
Middleware);
    3. An ISV's, IHV's, IAP's, ICP's or OEM's rights may be conditioned 
on its not assigning, transferring or sublicensing its rights under any 
license granted under this provision;
    4. The terms of any license granted under this section are in all 
respects consistent with the express terms of this Final Judgment; and
    5. An ISV, IHV, IAP, ICP, or OEM may be required to grant to 
Microsoft on reasonable and nondiscriminatory terms a license to any 
intellectual property rights it may have relating to the exercise of 
their options or alternatives provided by this Final Judgment; the 
scope of such license shall be no broader than is necessary to insure 
that Microsoft can provide such options or alternatives.
    Beyond the express terms of any license granted by Microsoft 
pursuant to this section, this Final Judgment does not, directly or by 
implication, estoppel or otherwise, confer any rights, licenses, 
covenants or immunities with regard to any Microsoft intellectual 
property to anyone.
    J. No provision of this Final Judgment shall:
    1. Require Microsoft to document, disclose or license to third 
parties: (a) Portions of APIs or Documentation or portions or layers of 
Communications Protocols the disclosure of which would compromise the 
security of a particular installation or group of installations of 
anti-piracy, anti-virus, software licensing, digital rights management, 
encryption or authentication systems, including without limitation, 
keys, authorization tokens or enforcement criteria; or (b) and API, 
interface or other information related to any Microsoft product it 
lawfully directed not to do so by a governmental agency of competent 
jurisdiction.
    2. Prevent Microsoft from conditioning any license of any API, 
Documentation or Communications Protocol related to anti-piracy 
systems, anti-virus technologies, license enforcement mechanisms, 
authentication/authorization security, or third party intellectual 
property protection mechanisms of any Microsoft

[[Page 59456]]

product to any person or entity on the requirement that the licensee: 
(a) Has no history of software counterfeiting or privacy or willful 
violation of intellectual property rights, (b) has a reasonable 
business need for the API, Documentation or Communications Protocol for 
a planned or shipping product, (c) meets reasonable, objective 
standards established by Microsoft for certifying the authenticity and 
viability of its business, (d) agrees to submit, at its own expense, 
any computer program using such APIs, Documentation or Communication 
Protocols to third-party verification, approved by Microsoft, to test 
for and ensure verification and compliance with Microsoft 
specifications for use of the API or interface, which specifications 
shall be related to proper operation and integrity of the systems and 
mechanisms identified in this paragraph.

IV. Compliance and Enforcement Procedures

A. Enforcement Authority
    1. The Plaintiffs shall have exclusive responsibility for enforcing 
this Final Judgment. Without in any way limiting the sovereign 
enforcement authority of each of the plaintiff States, the plaintiff 
States shall form a committee to coordinate their enforcement of this 
Final Judgment. A plaintiff State shall take no action to enforce this 
Final Judgment without first consulting with the United States and with 
the plaintiff States' enforcement committee.
    2. To determine and enforce compliance with this Final Judgment, 
duly authorized representatives of the United States and the plaintiff 
States, on reasonable notice to Microsoft and subject to any lawful 
privilege, shall be permitted the following:
    a. Access during normal office hours to inspect any and all source 
code, books, ledgers, accounts, correspondence, memoranda and other 
documents and records in the possession, custody, or control of 
Microsoft, which may have counsel present, regarding any matters 
contained in this Final Judgment.
    b. Subject to the reasonable convenience of Microsoft and without 
restraint or interference from it, to interview, informally or on the 
record, officers, employees, or agents of Microsoft, who may have 
counsel present, regarding any matters contained in this Final 
Judgment.
    c. Upon written request of the United States or a duly designated 
representative of a plaintiff State, on reasonable notice given to 
Microsoft, Microsoft shall submit such written reports under oath as 
requested regarding any matters contained in this Final Judgment. 
Individual plaintiff States will consult with the plaintiff States' 
enforcement committee to minimize the duplication and burden of the 
exercise of the foregoing powers, where practicable.
    3. The Plaintiffs shall not disclose any information or documents 
obtained from Microsoft under this Final Judgment except for the 
purpose of securing compliance with this Final Judgment, in a legal 
proceeding to which one or more of the Plaintiffs is a party, or as 
otherwise required by law; provided that the relevant Plaintiff(s) must 
provide ten days' advance notice to Microsoft before disclosing in any 
legal proceeding (other than a grand jury proceeding) to which 
Microsoft is not a party any information or documents provided by 
Microsoft pursuant to this Final Judgment which Microsoft has 
identified in writing as material as to which a claim of protection may 
be asserted under Rule 26(c)(7) of the Federal Rules of Civil 
Procedure.
    4. The Plaintiffs shall have the authority to seek such orders as 
are necessary from the Court to enforce this Final Judgment, provided, 
however, that the Plaintiffs shall afford Microsoft a reasonable 
opportunity to cure alleged violations of sections III.C, III.D, III.E 
and III.H, provided further that any action by Microsoft to cure any 
such violation shall not be a defense to enforcement with respect to 
any knowing, willful or systematic violations.
B. Appointment of a Technical Committee
    1. Within 30 days of entry of this Final Judgment, the parties 
shall create and recommend to the Court for its appointment a three-
person Technical Committee (``TC'') to assist in enforcement of and 
compliance with this Final Judgment.
    2. The TC members shall be experts in software design and 
programming. No TC member shall have a conflict of interest that could 
prevent him or her from performing his or her duties under this Final 
Judgment in a fair and unbiased manner. Without limitation to the 
foregoing, no TC member (absent the agreement of both parties):
    a. Shall have been employed in any capacity by Microsoft or any 
competitor to Microsoft within the past year, nor shall she or he be so 
employed during his or her term on the TC;
    b. Shall have been retained as a consulting or testifying expert by 
any person in this action or in any other action adverse to or on 
behalf of Microsoft; or
    c. Shall perform any other work for Microsoft or any competitor of 
Microsoft for two years after the expiration of the term of his or her 
service on the TC.
    3. Within 7 days of entry of this Final Judgment, the Plaintiffs as 
a group and Microsoft shall each select one member of the TC, and those 
two members shall then select the third member. The selection and 
approval process shall proceed as follows.
    a. As soon as practicable after submission of this Final Judgment 
to the Court, the Plaintiffs as a group and Microsoft shall each 
identify to the other the individual it proposes to select as its 
designee to the TC. The Plaintiffs and Microsoft shall not object to 
each other's selection on any ground other than failure to satisfy the 
requirements of section IV.B.2 above. Any such objection shall be made 
within ten business days of the receipt of notification of selection.
    b. The Plaintiffs shall apply to the Court for appointment of the 
persons selected by the Plaintiffs and Microsoft pursuant to section 
IV.B.3.a above. Any objections to the eligibility of a selected person 
that the parties have failed to resolve between themselves shall be 
decided by the Court based solely on the requirements stated in section 
IV.B.2 above.
    c. As soon as practical after their appointment by the Court, the 
two members of the TC selected by the Plaintiffs and Microsoft (the 
``Standing Committee Members'') shall identify to the Plaintiffs and 
Microsoft the person that they in turn propose to select as the third 
member of the TC. The Plaintiffs and Microsoft shall not object to this 
selection on any grounds other than failure to satisfy the requirements 
of section IV.B.2 above. Any such objection shall be made within ten 
business days of the receipt of notification of the selection and shall 
be served on the other party as well as on the Standing Committee 
Members.
    d. The Plaintiffs shall apply to the Court for appointment of the 
person selected by the Standing Committee Members. If the Standing 
Committee Members cannot agree on a third member of the TC, the third 
member shall be appointed by the Court. Any objection by Microsoft or 
the Plaintiffs to the eligibility of the person selected by the 
Standing Committee Members which the parties have failed to resolve 
among themselves shall also be decided by the Court based on the 
requirements stated in section IV.B.2 above.
    4. Each TC member shall serve for an initial term of 30 months. At 
the end of

[[Page 59457]]

a TC member's initial 30-month term, the party that originally selected 
him or her may, in its sole discretion, either request re-appointment 
by the Court to a second 30-month term or replace the TC member in the 
same manner as provided for in section IV.B.3.a above. In the case of 
the third member of the TC, that member shall be re-appointed or 
replaced in the manner provided in section IV.B.3.c above.
    5. If the United States determines that a member of the TC has 
failed to act diligently and consistently with the purposes of this 
Final Judgment, or if a member of the TC resigns, or for any other 
reason ceases to serve in his or her capacity as a member of the TC, 
the person or persons that originally selected the TC member shall 
select a replacement member in the same manner as provided for in 
section IV.B.3.
    6. Promptly after appointment of the TC by the Court, the United 
States shall enter into a Technical Committee services agreement (``TC 
Services Agreement'') with each TC member that grants the rights, 
powers and authorities necessary to permit the TC to perform its duties 
under this Final Judgment. Microsoft shall indemnify each TC member and 
hold him or her harmless against any losses, claims, damages, 
liabilities or expenses arising out of, or in connection with, the 
performance of the TC's duties, except to the extent that such 
liabilities, losses, damages, claims, or expenses result from 
misfeasance, gross negligence, willful or wanton acts, or bad faith by 
the TC member. The TC Services Agreements shall include the following.
    a. The TC members shall serve, without bond or other security, at 
the cost and expense of Microsoft on such terms and conditions as the 
Plaintiffs approve, including the payment of reasonable fees and 
expenses.
    b. The TC Services Agreement shall provide that each member of the 
TC shall comply with the limitations provided for in section IV.B.2 
above.
    7. Microsoft shall provide the TC with a permanent office, 
telephone, and other office support facilities at Microsoft's corporate 
campus in Redmond, Washington. Microsoft shall also, upon reasonable 
advance notice from the TC, provide the TC with reasonable access to 
available office space, telephone, and other office support facilities 
at any other Microsoft facility identified by the TC.
    8. The TC shall have the following powers and duties:
    a. The TC shall have the power and authority to monitor Microsoft's 
compliance with its obligations under this final judgment.
    b. The TC may, on reasonable notice to Microsoft:
    (i) Interview, either informally or on the record, any Microsoft 
personnel, who may have counsel present; any such interview to be 
subject to the reasonable convenience of such personnel and without 
restraint or interference by Microsoft;
    (ii) Inspect and copy any document in the possession, custody or 
control of Microsoft personnel;
    (iii) Obtain reasonable access to any systems or equipment to which 
Microsoft personnel have access;
    (iv) Obtain access to, and inspect, any physical facility, building 
or other premises to which Microsoft personnel have access; and
    (v) Require Microsoft personnel to provide compilations of 
documents, data and other information, and to submit reports to the TC 
containing such material, in such form as the TC may reasonably direct.
    c. The TC shall have access to Microsoft's source code, subject to 
the terms of Microsoft's standard source code Confidentiality 
Agreement, as approved by the Plaintiffs and to be agreed to by the TC 
members pursuant to section IV.B.9 below, and by any staff or 
consultants who may have access to the source code. The TC may study, 
interrogate and interact with the source code in order to perform its 
functions and duties, including the handling of complaints and other 
inquiries from non-parties.
    d. The TC shall receive complaints from the Compliance Officer, 
third parties or the Plaintiffs and handle them in the manner specified 
in section IV.D below.
    e. The TC shall report in writing to the Plaintiffs every six 
months until expiration of this Final Judgment the actions it has 
undertaken in performing its duties pursuant to this Final Judgment, 
including the identification of each business practice reviewed and any 
recommendations made by the TC.
    f. Regardless of when reports are due, when the TC has reason to 
believe that there may have been a failure by Microsoft to comply with 
any term of this Final Judgment, the TC shall immediately notify the 
Plaintiffs in writing setting forth the relevant details.
    g. TC members may communicate with non-parties about how their 
complaints or inquiries might be resolved with Microsoft, so long as 
the confidentiality of information obtained from Microsoft is 
maintained.
    h. The TC may hire at the cost and expense of Microsoft, with prior 
notice to Microsoft and subject to approval by the Plaintiffs, such 
staff or consultants (all of whom must met the qualifications of 
section IV.B.2) as are reasonably necessary for the TC to carry out its 
duties and responsibilities under this Final Judgment. The compensation 
of any person retained by the TC shall be based on reasonable and 
customary terms commensurate with the individual's experience and 
responsibilities.
    i. The TC shall account for all reasonable expenses incurred, 
including agreed upon fees for the TC members' services, subject to the 
approval of the Plaintiffs. Microsoft may, on application to the Court, 
object to the reasonableness of any such fees or other expenses. On any 
such application: (a) The burden shall be on Microsoft to demonstrate 
unreasonableness; and (b) the TC member(s) shall be entitled to recover 
all costs incurred on such application (including reasonable attorney's 
fees and costs), regardless of the Court's disposition of such 
application, unless the Court shall expressly find that the TC's 
opposition to the application was without substantial justification.
    9. Each TC member, and any consultants or staff hired by the TC, 
shall sign a confidentiality agreement prohibiting disclosure of any 
information obtained in the court of performing his or her duties as a 
member of the TC or as a person assisting the TC to anyone other than 
Microsoft, the Plaintiffs, or the Court. All information gathered by 
the TC in connection with this Final Judgment and any report and 
recommendations prepared by the TC shall be trated as Highly 
Confidential under the Protective Order in this case, and shall not be 
disclosed to any person other than Microsoft and the Plaintiffs except 
as allowed by the Protective Order entered in the Action or by the 
further order of this Court.
    10. No member of the TC shall make any public statements relating 
to the TC's activities.
C. Appointment of a Microsoft Internal Compliance Officer
    1. Microsoft shall designate, within 30 days of entry of this Final 
Judgment, an internal Compliance Officer who shall be an employee of 
Microsoft with responsibility for administering Microsoft's antitrust 
compliance program and helping to ensure compliance with this Final 
Judgment.
    2. The Compliance Officer shall supervise the review of Microsoft's 
activities to ensure that they comply with this Final Judgment. He or 
she may

[[Page 59458]]

be assisted by other employees of Microsoft.
    3. The Compliance Officer shall be responsible for performing the 
following activities:
    a. Within 30 days after entry of this Final Judgment, distributing 
a copy of the Final Judgment to all officers and directors of 
Microsoft;
    b. Promptly distributing a copy of this Final Judgment to any 
person who succeeds to a position described in section IV.C.3. a above;
    c. Ensuring that those persons designated in section IV.C.3.a above 
are annually briefed on the meaning and requirements of this Final 
Judgment and the U.S. antitrust laws and advising them that Microsoft's 
legal advisors are available to confer with them regarding any question 
concerning compliance with this Final Judgment or under the U.S. 
antitrust laws;
    d. Obtaining from each person designated in section IV.C.3.a above 
an annual written certification that he or she: (i) Has read and agrees 
to abide by the terms of this Final Judgment; and (ii) has been advised 
and understands that his or her failure to comply with this Final 
Judgment may result in a finding of contempt of court;
    e. Maintaining a record of all persons to whom a copy of this Final 
Judgment has been distributed and from whom the certification described 
in section IV.C.3.d above has been obtained;
    f. Establishing and maintaining the website provided for in section 
IV.D.3.b below.
    g. Receiving complaints from third parties, the TC and the 
Plaintiffs concerning Microsoft's compliance with this Final Judgment 
and following the appropriate procedures set forth in section IV.D 
below; and
    h. Maintaining a record of all complaints received and action taken 
by Microsoft with respect to each such complaint.
D. Voluntary Dispute Resolution
    1. Third parties may submit complaints concerning Microsoft's 
compliance with this Final Judgment to the Plaintiffs, the TC or the 
Compliance Officer.
    2. In order to enhance the ability of the Plaintiffs to enforce 
compliance with this Final Judgment, and to advance the parties' joint 
interest and the public interest in prompt resolution of issues and 
disputes, the parties have agreed that the TC and the Compliance 
Officer shall have the following additional responsibilities.
    3. Submissions to the Compliance Officer.
    a. Third parties, the TC, or the Plaintiffs in their discretion may 
submit to the Compliance Officer any complaints concerning Microsoft's 
compliance with this Final Judgment. Without in any way limiting its 
authority to take any other action to enforce this Final Judgment, the 
Plaintiffs may submit complaints related to sections III.C, III.D, 
III.E and III.H to the Compliance Officer whenever doing so would be 
consistent with the public interest.
    b. To facilitate the communication of complaints and inquiries by 
third parties, the Compliance Officer shall place on Microsoft's 
Internet web site, in a manner acceptable to the Plaintiffs, the 
procedures for submitting complaints. To encourage whenever possible 
the informal resolution of complaints and inquiries, the web site shall 
provide a mechanism for communicating complaints and inquiries to the 
Compliance Officer.
    c. Microsoft shall have 30 days after receiving a complaint to 
attempt to resolve it or reject it, and will then promptly advise the 
TC of the nature of the complaint and its disposition.
    4. Submissions to the TC.
    a. The Compliance Officer, third parties or the Plaintiffs in their 
discretion may submit to the TC any complaints concerning Microsoft's 
compliance with this Final Judgment.
    b. The TC shall investigate complaints received and will consult 
with the Plaintiffs regarding its investigation. At least once during 
its investigation, and more often when it may help resolve complaints 
informally, the TC shall meet with the Compliance Officer to allow 
Microsoft to respond to the substance of the complaint and to determine 
whether the compliant can be resolved without further proceedings.
    c. If the TC concludes that a complaint is meritorious, it shall 
advise Microsoft and the Plaintiffs of its conclusion and its proposal 
for cure.
    d. No work product, findings or recommendations by the TC may be 
admitted in any enforcement proceeding before the Court for any 
purpose, and no member of the TC shall testify by deposition, in court 
or before any other tribunal regarding any matter related to this Final 
Judgment.
    e. The TC may preserve the anonymity of any third party complaint 
where it deems it appropriate to do so upon the request of the 
Plaintiffs or the third party, or in its discretion.

V. Termination

    A. Unless this Court grants an extension, this Final Judgment will 
expire on the fifth anniversary of the date it is entered by the Court.
    B. In any enforcement proceeding in which the Court has found that 
Microsoft has engaged in a pattern of willful and systematic 
violations, the Plaintiffs may apply to the Court for a one-time 
extension of this Final Judgment of up to two years, together with such 
other relief as the Court may deem appropriate.

VI. Definitions

    A. ``Application Programming Interfaces (APIs)'' means the 
interfaces, including any associated callback interfaces, that 
Microsoft Middleware running on a Windows Operating System Product uses 
to call upon that Windows Operating System Product in order to obtain 
any services from that Windows Operating System Product.
    B. ``Communications Protocol'' means the set of rules for 
information exchange to accomplish predefined tasks between a Windows 
Operating System Product and a server operating system product 
connected via a network, including, but not limited to, a local area 
network, a wide area network or the Internet. These rules govern the 
format, semantics, timing, sequencing, and error control of messages 
exchanged over a network.
    C. ``Consideration'' means any monetary payment or the provision of 
preferential licensing terms; technical, marketing, and sales support; 
enabling programs; product information; information about future plans; 
developer support; hardware or software certification or approval; or 
permission to display trademarks, icons or logos.
    D. ``Covered OEMs'' means the 20 OEMs with the highest worldwide 
volume of licenses of Windows Operating System Products reported to 
Microsoft in Microsoft's fiscal year preceding the effective date of 
the Final Judgment. The OEMs that fall within this definition of 
Covered OEMs shall be recomputed by Microsoft as soon as practicable 
after the close of each of Microsoft's fiscal years.
    E. ``Documentation'' means all information regarding the 
identification and means of using APIs that a person of orindary skill 
in the art requires to make effective use of those APIs. Such 
information shall be of the sort and to the level of specificity, 
precision and detail that Microsoft customarily provides for APIs it 
documents in the Microsoft Developer Network (``MSDN'').
    F. ``IAP'' means an Internet access provider that provides 
consumers with a connection to the Internet, with or without its own 
proprietary content.

[[Page 59459]]

    G. ``ICP'' means an Internet content provider that provides content 
to users of the Internet by maintaining Web sites.
    H. ``IHV'' means an independent hardware vendor that develops 
hardware to be included in or used with a Personal Computer running a 
Windows Operating System Product.
    I. ``ISV'' means an entity other than Microsoft that is engaged in 
the development or marketing of software products.
    J. ``Microsoft Middleware'' means software code that
    1. Microsoft distributes separately from a Windows Operating System 
Product to update that Windows Operating System Product;
    2. Is Trademarked;
    3. Provides the same or substantially similar functionality as a 
Microsoft Middleware Product; and
    4. Includes at least the software code that controls most or all of 
the user interface elements of that Microsoft Middleware.
    Software code described as part of, and distributed separately to 
update, a Microsoft Middleware Product shall not be deemed Microsoft 
Middleware unless identified as a new major version of that Microsoft 
Middleware Product. A major version shall be identified by a whole 
number or by a number with just a single digit to the right of the 
decimal point.
    K. ``Microsoft Middleware Product'' means
    1. The functionality provided by Internet Explorer, Microsoft's 
Java Virtual Machine, Windows Media Player, Windows Messenger, Outlook 
Express and their successors in a Windows Operating System Product, and
    2. For any functionality that is first licensed, distributed or 
sold by Microsoft after the entry of this Final Judgment and that is 
part of any Windows Operating System Product.
    a. Internet browsers email client software, networked audio/video 
client software, instant message software or
    b. Functionality provided by Microsoft software that--
    i. Is, or in the year preceding the commercial release of any new 
Windows Operating System Product was, distributed separately by 
Microsoft (or by an entity acquired by Microsoft) from a Windows 
Operating System Product;
    ii. Is similar to the functionality provided by a Non-Microsoft 
Middleware Product; and
    iii. Is Trademarked.
    Functionality that Microsoft describes or markets as being part of 
a Microsoft Middleware Product (such as a service pack, upgrade, or bug 
fix for Internet Explorer), or that is a version of a Microsoft 
Middleware Product (such as Internet Explorer 5.5), shall be considered 
to be part of that Microsoft Middleware Product.
    L. ``Microsoft Platform Software'' means (i) a Windows Operating 
System Product and/or (ii) a Microsoft Middleware Product.
    M. ``Non-Microsoft Middleware'' means a non-Microsoft software 
product running on a Windows Operating System Product that exposes a 
range of functionality to ISVs through published APIs, and that could, 
if ported to or made interoperable with, a non-Microsoft Operating 
System, thereby make it easier for applications that rely in whole or 
in part on the functionality supplied by that software product to be 
ported to or run on that non-Microsoft Operating System.
    N. ``Non-Microsoft Middleware Product'' means a non-Microsoft 
software product running on a Windows Operating System Product (i) that 
exposes a range of functionality to ISVs through published APIs, and 
that could, if ported to or made interoperable with, a non-Microsoft 
Operating System, thereby make it easier for applications that rely in 
whole or in part on the functionality supplied by that software product 
to be ported to or run on that non-Microsoft Operating System, and (ii) 
of which at least one million copies were distributed in the United 
States within the previous year.
    O. ``OEM'' means an original equipment manufacturer or Personal 
Computers that is a licensee of a Windows Operating System Product.
    P. ``Operating System'' means the software code that, inter alia, 
(i) controls the allocation and usage of hardware resources (such as 
the microprocessor and various peripheral devices) of a Personal 
Computer, (ii) provides a platform for developing applications by 
exposing functionality to ISVs through APIs, and (iii) supplies a user 
interface that enables users to access functionality of the operating 
system and in which they can run applications.
    Q. ``Personal Computer'' means any computer configured so that its 
primary purpose is for use by one person at a time, that uses a video 
display and keyboard (whether or not that video display and keyboard is 
included) and that contains an Intel x86 compatible (or successor) 
microprocessor. Servers, television set top boxes, handheld computers, 
game consoles, telephones, pagers, and personal digital assistants are 
examples of products that are not Personal Computers within the meaning 
of this definition.
    R. ``Timely Manner'' means at the time Microsoft first releases a 
beta test version of a Windows Operating System Product that is 
distributed to 150,000 or more beta testers.
    S. ``Top-Level Window'' means a window displayed by a Windows 
Operating System Product that (a) has its own window controls, such as 
move, resize, close, minimize, and maximize, (b) can contain sub-
windows, and (c) contains user interface elements under the control of 
at least one independent process.
    T. ``Trademarked'' means distributed in commerce and identified as 
distributed by a name other than Microsoft or 
Windows that Microsoft has claimed as a trademark or service 
mark by (i) marking the name with trademark notices, such as  
or \TM\, in connection with a product distributed in the United States; 
(ii) filing an application for trademark protection for the name in the 
United States Patent and Trademark Office; or (iii) asserting the name 
as a trademark in the United States in a demand letter or lawsuit. Any 
product distributed under descriptive or generic terms or a name 
comprised of the Microsoft or Windows trademarks 
together with descriptive or generic terms shall not be Trademarked as 
that term is used in this Final Judgment. Microsoft hereby disclaims 
any trademark rights in such descriptive or generic terms apart from 
the Microsoft or Windows trademarks, and hereby 
abandons any such rights that it may acquire in the future.
    U. ``Windows Operating System Product'' means the software code (as 
opposed to source code) distributed commercially by Microsoft for use 
with Personal Computers as Windows 2000 Professional, Windows XP Home, 
Windows XP Professional, and successors to the foregoing, including the 
Personal Computer versions of the products currently code named 
``Longhorn'' and ``Blackcomb'' and their successors, including 
upgrades, bug fixes, service packs, etc. The software code that 
comprises a Windows Operating System Product shall be determined by 
Microsoft in its sole discretion.

VII. Further Elements

    Jurisdiction is retained by this Court over this action and the 
parties thereto for the purpose of enabling either of the parties 
thereto to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify or terminate any of its provisions, to 
enforce

[[Page 59460]]

compliance, and to punish violations of its provisions.

VIII. Third Party Rights

    Nothing in this Final Judgment is intended to confer upon any other 
persons any rights or remedies of any nature whatsoever hereunder or by 
reason of this Final Judgment.

United States District Court for the District of Columbia

United States of America, Plaintiff, v. Microsoft Corporation, 
Defendant

[Civil Action No. 98-1232 (CKK)]

State of New York ex. rel., Attorney General Eliot Spitzer, et al., 
Plaintiffs, v. Microsoft Corporation, Defendant

[Civil Action No. 98-1233 (CKK)]

Competitive Impact Statement

    Pursuant to section 2(b) of the Antitrust Procedures and Penalties 
Act (``APPA''), 15 U.S.C. 16(b)-(h), the United States files this 
Competitive Impact Statement relating to the revised proposed Final 
Judgment (``Proposed Final Judgment'') submitted on November 6, 2001 
for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On May 18, 1998, the United States filed a civil antitrust 
Complaint alleging that Microsoft Corporation (``Microsoft''), the 
world's largest supplier of computer software for personal computers, 
restrained competition in violation of sections 1 and 2 of the Sherman 
Act, 15 U.S.C. 1-2. The case was tried in the United States District 
Court for the District of Columbia, which found that Microsoft violated 
both sections 1 and 2 of the Sherman Act. Microsoft appealed to the 
United States Court of Appeals for the District of Columbia, and the 
Court of Appeals affirmed in part and reversed in part the decision of 
the District Court, and vacated the Final Judgment that had been 
entered by the District Court. After the case was remanded to District 
Court for further proceedings, the parties reached the agreement that 
is embodied in the Proposed Final Judgment. The Proposed Final Judgment 
will provide a prompt, certain and effective remedy for consumers by 
imposing injunctive relief to halt continuance and prevent recurrence 
of the violations of the Sherman Act by Microsoft that were upheld by 
the Court of Appeals and restore competitive conditions to the market. 
Entry of the Proposed Final Judgment will terminate this action, except 
that the Court will retain jurisdiction to construe, modify, or enforce 
its provisions and to punish violations thereof.

II. Overview of Relief

    The Court of Appeals upheld the conclusion that Microsoft had 
engaged in a variety of exclusionary acts designed to protect its 
operating system monopoly from the threat posed by a type of platform 
software known as ``middleware,'' in violation of section 2 of the 
Sherman Act. Specifically, the Court determined that, in response to 
the middleware threat, Microsoft: (1) Undertook a variety of 
restrictions on personal computer Original Equipment Manufacturers 
(``OEMs''); (2) integrated its Web browser into Windows in a non-
removable way while excluding rivals; (3) engaged in restrictive and 
exclusionary dealings with Internet Access Providers, Independent 
Software Vendors and Apple Computer; and (4) attempted to mislead and 
threaten software developers in order to contain and subvert Java 
middleware technologies that threatened Microsoft's operating system 
monopoly.
    The relief contained in the proposed Final Judgment provides 
prompt, certain and effective remedies for consumers. The requirements 
and prohibitions will eliminate Microsoft's illegal practices, prevent 
recurrence of the same or similar practices, and restore the 
competitive threat that middleware products posed prior to Microsoft's 
unlawful undertakings. The provisions benefit consumers by: \1\
     Ensuring that computer manufacturers have contractual and 
economic freedom to make decisions about distributing and supporting 
non-Microsoft middleware products without fear of coercion or 
retaliation by Microsoft, by broadly prohibiting retaliation against a 
computer manufacturer that supports or distributes alternative 
middleware or operating systems.
     Further ensuring computer manufacturers' freedom to make 
middleware decisions by requiring that Microsoft provide uniform 
licensing terms to the 20 largest and most competitively significant 
computer manufacturers.
     Ensuring that computer manufacturers have the freedom to 
configure the personal computers they sell to feature and promote non-
Microsoft middleware, and ensuring that developers of these 
alternatives to Microsoft products are able to feature those products 
on personal computers, by prohibiting Microsoft from restricting 
computer manufacturers' ability to install and feature non-Microsoft 
middleware and competing operating systems in a variety of ways on the 
desktop and elsewhere.
     Ensuring that computer manufacturers have the freedom to 
offer, and consumers the freedom to use, non-Microsoft middleware, by 
requiring Microsoft to provide the ability for computer manufacturers 
and consumers to customize, without interference or reversal, their 
personal computers as to the middleware they install, use and feature, 
and by requiring Microsoft to allow them also to designate non-
Microsoft middleware to be invoked automatically in place of Microsoft 
middleware.
     Ensuring that Microsoft cannot thwart the purposes of the 
remedies in the Proposed Final Judgment by withholding or providing 
only in discriminatory fashion necessary intellectual property 
licenses, by requiring Microsoft to offer necessary related licenses 
for the intellectual property that it is required to disclose.
     Creating the opportunity for software developers and other 
computer industry participants to develop new middleware products that 
compete directly with Microsoft by requiring Microsoft to disclose all 
of the interfaces and related technical information that Microsoft's 
middleware uses to interoperate with the Windows operating system.
     Preventing Microsoft from incorporating into the Windows 
operating system features or functionality with which only its own 
servers can interoperate by requiring Microsoft to disclose the 
communications protocols that are necessary for software located on a 
computer server to interoperate with the Windows operating system.
     Ensuring that software and hardware developers are free to 
develop, distribute, or write to software that competes with Microsoft 
middleware or operating system software without adverse action by 
Microsoft, by prohibiting Microsoft from retaliating against developers 
or conditioning consideration on a developer refraining from 
developing, distributing or writing to software that competes with 
Microsoft platform software.
     Depriving Microsoft of the means with which to retaliate 
against, or induce the hindering of the development of, competing 
products by prohibiting Microsoft from entering into agreements that 
require parties to exclusively, or in a fixed percentage, promote 
Microsoft middleware or operating system products.
    The requirements and prohibitions in the Proposed Final Judgment 
are supported by strong enforcement

[[Page 59461]]

provisions, including the power to seek criminal and civil contempt 
sanctions and other relief in the event of a violation, and the 
imposition of three full-time, on-site, independent enforcement 
monitors. The Proposed Final Judgment also provides that, in an 
enforcement proceeding in which Microsoft has been found to have 
engaged in willful and systematic violations, the Court may order that 
the five-year term may be extended by up to two years, in addition to 
any other relief the Court deems appropriate.

III. Description of the Practices Giving Rise to the Alleged Violation

A. Background of the Proceedings
1. Proceedings in the District Court
    On the same day that the United States filed its Complaint against 
Microsoft, 20 states and the District of Columbia (one state later 
withdrew and another later reached a separate settlement) filed a 
similar, although not identical, complaint. The District Court 
consolidated the cases at Microsoft's request. The Complaint alleged 
that Microsoft unlawfully maintained its monopoly in the market for 
operating systems designed to run on Intel-compatible personal 
computers by engaging in a series of exclusionary, anticompetitive and 
predatory acts in violation of section 2 of the Sherman Act. The 
Complaint also asserted that Microsoft unlawfully attempted to 
monopolize the market for Web browsers in violation of section 2 of the 
Sherman Act, and that certain actions taken by Microsoft as part of its 
campaign to protect its operating system monopoly power, such as tying 
its Web browser, Internet Explorer, to its operating system and 
entering into exclusive dealing arrangements, constituted unreasonable 
restraints on competition in violation of section 1 of the Sherman Act.
    After extensive discovery, on October 19, 1998, the Court began a 
78-day trial that ended on June 24, 1999. The Court heard testimony 
from 26 witnesses and admitted depositions of 79 other witnesses and 
2,733 exhibits. On November 5, 1999, the Court entered its Findings of 
Fact. United States. v. Microsoft Corp., 84 F. Supp.2d 9 (D.D.C. 1999). 
On April 3, 2000, after the parties had engaged in four months of 
intensive but ultimately unsuccessful mediation efforts before Judge 
Richard Posner, the Court entered its Conclusions of Law. United States 
v. Microsoft Corp., 87 F. Supp.2d 30 (D.D.C. 2000).
    The District Court held that Microsoft engaged in a series of 
illegal anticompetitive acts to protect and maintain its personal 
computer operating system monopoly, in violation of section 2 of the 
Sherman Act and analogous state laws. The Court also concluded that 
Microsoft violated Section 2 by attempting to monopolize the market for 
Web browsers and section 1 by tying its browser to its Windows 
operating system. The Court ruled that Microsoft's exclusive dealing 
arrangements did not separately violate Section 1. The Court then 
proceeded to consider a remedy for Microsoft's antitrust violations, 
and on June 7, 2000, issued this Final Judgment, which imposed a remedy 
that included a break-up of Microsoft into separate operating system 
and applications businesses, along with interim conduct provisions. 
United States v. Microsoft Corp., 97 F. Supp. 2d 59 (D.D.C. 2000).
2. Proceedings in the Court of Appeals
    Microsoft appealed the District Court's decision. On June 28, 2001, 
the Court of Appeals, sitting en banc, unanimously affirmed in part, 
reversed in part and remanded in part the District Court judgment. 
Specifically, the Court affirmed the District Court's finding and 
conclusion that Microsoft had illegally maintained its operating system 
monopoly in violation of Section 2. United States v. Microsoft Corp., 
253 F.3d 34 (D.C. Cir. 2001). The Court upheld the District Court's 
finding of monopoly power in the market for Intel-compatible personal 
computer operating systems. With certain exceptions, the Court agreed 
with the District Court's findings and conclusions that Microsoft had 
engaged in a variety of exclusionary acts designed to protect its 
operating system monopoly from the threat posed by a particular type of 
software known as ``middleware.'' Specifically, the Court upheld the 
conclusion that, in response to the middleware threat, Microsoft 
undertook a variety of restrictions on OEMs; integrated Internet 
Explorer into Windows in a non-removable way while excluding rivals; 
engaged in restrictive and exclusionary dealings with Internet Access 
Providers, Independent Software Vendors, and Apple Computer; and 
attempted to mislead and threaten software developers in order to 
contain and subvert so-called ``Java'' middleware technologies that 
threatened Microsoft's operating system monopoly. Each of these 
actions, which served to maintain the Windows monopoly, violated 
section 2 of the Sherman Act.
    The Court reversed and remanded the Section 1 tying claim for 
reconsideration under the more rigorous rule of reason standard. It 
also reversed the District Court's determination that Microsoft had 
attempted to monopolize the Web browser market in violation of Section 
2. In light of its finding that an evidentiary hearing on remedy was 
necessary and the fact that the District Court's Final Judgment may 
have rested on liability determinations that did not survive appellate 
review, the Court of Appeals vacated the Final Judgment and remanded 
the case to the District Court for new remedy proceedings. Finally, the 
Court of Appeals disqualified the trial judge retroactively to the date 
of entry of the Final Judgment based on violations of 28 U.S.C. 455(a).
3. Proceedings in the District Court Upon Remand
    Upon remand, the District Court ordered the parties to confer and 
file a Joint Status Report, identifying the issues that remained on 
remand and the measures to be taken to reach resolution, and proposing 
a schedule. As part of that process, Plaintiffs advised Microsoft that 
they did not intend to pursue further proceedings on remand regarding 
their Section 1 tying claim and did not intend to pursue on remand the 
restructuring of Microsoft into separate operating system and 
applications businesses that had previously been ordered by the 
District Court. Plaintiffs took these steps after careful consideration 
of the Court of Appeals' decision and its likely impact on prospective 
remedies, in an effort to obtain prompt, effective and certain relief 
for consumers.
    Subsequently, the District Court ordered the parties into a period 
of intensive settlement and mediation discussions to attempt to reach a 
fair resolution, commencing on September 28, 2001, and expiring on 
November 2, 2001. During that period, the parties expended every effort 
to comply with the Court's order and, after extensive negotiations, the 
United States, nine of the States (New York, Ohio, Illinois, Kentucky, 
Louisiana, Maryland, Michigan, North Carolina, and Wisconsin), and 
Microsoft were able to reach agreement upon a Proposed Final Judgment 
that would achieve a prompt, certain and effective remedy for consumers 
by imposing injunctive relief to enjoin continuance and prevent 
recurrence of the violations of the Sherman Act by Microsoft that were 
upheld by the Court of Appeals, and restore the competitive conditions 
prevailing prior to Microsoft's unlawful conduct. The Proposed Final 
Judgment was filed on November 6, 2001.\2\

[[Page 59462]]

B. Factual Background
1. Microsoft's Operating System Monopoly
    Personal computers consist, inter alia, of central processing 
components (a microprocessor and main memory), software, and data 
storage (e.g., a hard disk). The software on a personal computer 
largely consists of an operating system and applications designed to 
accomplish specific tasks, such as word processing. The operating 
system controls the allocation and use of computer resources and serves 
as a ``platform'' for applications by exposing interfaces (application 
programming interfaces, or APIs) that applications invoke to perform 
crucial tasks such as displaying text on a screen.
    Microsoft has monopoly power in the market for Intel-compatible 
personal computer operating systems and undertook an extensive campaign 
of exclusionary acts to maintain its operating system monopoly. The 
relevant market for evaluating Microsoft's monopoly power is the 
licensing of all Intel-compatible personal computer operating systems 
worldwide. Intel-compatible personal computers are designed to function 
with Intel's 80x86 and successor families of microprocessors (or 
compatible microprocessors). Operating systems designed for Intel-
compatible personal computers do not run on other personal computers, 
and operating systems designed for other personal computers do not run 
on Intel-compatible personal computers. Moreover, consumers are very 
reluctant to substitute away from Intel-compatible personal computers 
(for any reason, including an increase in operating system prices) 
because to do so would entail incurring substantial costs and would not 
result in a satisfactory substitute. Thus, a monopolist of operating 
systems for Intel-compatible personal computers can set and maintain 
the price of a license substantially above that which would be charged 
in a competitive market without losing so many customers as to make the 
action unprofitable.
2. The Applications Barrier to Entry
    The operating system serves principally two functions: it enables 
the computer's hardware to operate and it serves as a platform for 
applications programs, such as word-processing and spreadsheets. The 
latter function is the source of an ``applications barrier to entry'' 
that protects Microsoft's monopoly power in the operating system 
market: users do not want to invest in an operating system until it is 
clear that the system will support generations of applications that 
will meet their needs, and developers do not want to invest in writing 
or quickly porting (i.e., adapting) applications for an operating 
system until it is clear that there will be a sizeable and stable 
market for it. This self-reinforcing cycle is sometimes referred to as 
a ``network effect,'' a phenomenon by which the attractiveness of a 
product increases with the number of people using it.
    The ubiquity of the Windows operating system thus induces 
developers to create vastly more applications for Windows than for 
other operating systems. The availability of a rich array of 
applications in turn attracts consumers to Windows. A competing 
operating system will not attract large numbers of users unless those 
users believe that there is and will continue to be a sufficient and 
timely array of applications available for use on that operating 
system. Software developers, however, have little incentive to write 
applications for an operating system without a large number of users.
3. Combating the Middleware Threats
    The formidable applications entry barrier may be eroded through 
platform software known as ``middleware.'' A middleware program is not 
an operating system; rather, it is platform software that runs on top 
of an operating system--i.e., uses operating system interfaces to take 
advantage of the operating system's code and functionality--and 
simultaneously exposes its own APIs so that applications can run on the 
middleware itself. An application written to rely exclusively on a 
middleware program's APIs could run on all operating systems on which 
that middleware runs. Because such middleware also runs on Windows, 
application developers would not be required to sacrifice Windows 
compatibility if they chose to write applications for a middleware 
platform. Applications developers would thus have incentives to write 
for widely used middleware, and users would not be reluctant to choose 
a non-Windows operating system for fear that it would run an 
insufficient array of applications.
    Middleware's potential to erode the applications barrier to entry 
thus poses a threat to Microsoft's ability to maintain its operating 
system monopoly. Recognizing this threat, Microsoft engaged in an 
extensive pattern of conduct designed to eliminate the threat posed by 
middleware. To protect its operating system monopoly, Microsoft focused 
on two incarnations of middleware that, working together, had the 
potential to weaken the applications barrier severely without the 
assistance of any other middleware: Netscape's Web browser and Sun 
Microsystems' implementation of the Java technologies.
    a. Microsoft's Campaign To Eliminate the Netscape Threat. In 
December 1994, Netscape first marketed a Web browser called Navigator. 
Within months, Navigator was the preeminent Web browser. Microsoft 
became deeply concerned that Netscape was moving its business in a 
direction that could diminish the applications barrier to entry and 
thus decided to eliminate the threat that Navigator would become a 
viable alternative platform for applications. Microsoft first tried to 
reach an agreement with Netscape in June 1995, pursuant to which 
Netscape would have stopped efforts to develop Navigator into 
``platform-level'' (i.e., API-exposing) browsing software for the 
Windows 95 operating system that was to be released later that summer; 
in return, Microsoft proposed to refrain from competing with Netscape 
in developing browsers for other operating systems.
    Microsoft warned Netscape that timely access to critical technical 
information about Windows APIs--information that Netscape needed to 
make its browser run well on Windows 95--depended on its acquiescence. 
Had Netscape acquiesced in Microsoft's proposal, it would have become 
all but impossible for Navigator or any other browser rival to pose a 
platform threat to Windows.
    Netscape did not accept Microsoft's proposal, and in response, 
Microsoft withheld from Netscape crucial Windows-related technical 
information that it routinely provided to others, and delayed the 
provision of necessary APIs, so that Netscape was excluded from most of 
the 1995 holiday selling season. Moreover, once it became clear to 
senior executives at Microsoft that Netscape would not abandon its 
efforts to develop Navigator into a platform, Microsoft focused its 
efforts on ensuring that few developers would write their applications 
to rely on the APIs that Navigator exposed.
    Microsoft understood that software developers would only write to 
the APIs exposed by Navigator in numbers large enough to threaten the 
applications barrier if they believed that Navigator would emerge as 
the standard software employed to browse the Web. If Microsoft could 
demonstrate that Netscape would not become the standard and that 
Microsoft's browser, Internet Explorer, would meet or exceed Netscape's 
browser usage share, developers would continue to focus

[[Page 59463]]

their efforts on the Windows platform. Therefore, to protect the 
applications barrier to entry, Microsoft embarked on a multifaceted 
campaign to maximize Internet Explorer's share of usage and to minimize 
Navigator's.
    Decision-makers at Microsoft worried that simply developing its own 
attractive browser product, providing it to consumers free of charge, 
and promoting it vigorously would not divert enough browser usage from 
Navigator to neutralize Navigator as a platform. Thus, rather than 
confine itself to improving and promoting Internet Explorer as a 
competitor to Navigator, Microsoft decided to constrict Netscape's 
access to the two distribution channels that led most efficiently to 
browser usage: installation by OEMs on new personal computers and 
distribution by Internet Access Providers (``IAPs''). Users rarely 
switched from whatever browsing software was placed most readily at 
their disposal, which was usually the browsing software installed on 
their computer by the OEM or supplied by their IAP when they signed up 
for Internet service. Microsoft thus sought to ensure that, to as great 
an extent as possible, OEMs and IAPs bundled and promoted Internet 
Explorer to the exclusion of Navigator.
    Microsoft largely succeeded in exiling Navigator from the crucial 
OEM distribution channel. By January 1998, Microsoft executive Joachim 
Kempin was able to report to CEO Bill Gates that Navigator was being 
shipped through only 4 of the 60 OEM distribution sub-channels, and 
even then most often in a position much less likely to lead to usage 
than would Internet Explorer's position. By early 1999, Navigator was 
present on the desktop of only a tiny percentage of the personal 
computers that OEMs shipped.
    Similarly, Microsoft's IAP channel restrictions significantly 
hampered Netscape's ability to distribute Navigator: they caused 
Internet Explorer's usage share to surge; they caused Navigator's usage 
share to plummet; they raised Netscape's own costs; and they sealed off 
a major portion of the IAP channel from the prospect of recapture by 
Navigator.
    To help ensure that developers would not view Navigator as truly 
cross-platform middleware, Microsoft also pressured Apple to make 
Navigator less readily accessible on Apple personal computers. As 
leverage to obtain Apple's compliance, Microsoft threatened to cancel 
development of its ``Office for Macintosh'' software, which, as 
Microsoft recognized, was critical to Apple's business. Microsoft 
required Apple to make Internet Explorer its default browser and 
restricted Apple's freedom to feature and promote non-Microsoft 
browsing software, in order to protect the applications barrier to 
entry.
    As part of its effort to hamper distribution of Navigator and to 
discourage the development of software that used non-Microsoft 
technology, Microsoft also targeted Independent Software Vendors 
(``ISVs''). Microsoft contractually required ISVs to use Internet 
Explorer-specific technologies in return for timely and commercially 
necessary technical information about Windows, and precluded important 
ISVs from distributing Navigator with their products.
    Microsoft's actions succeeded in eliminating the threat that the 
Navigator browser posed to Microsoft's operating system monopoly. 
Foreclosed from effectively using the OEM and IAP distribution channels 
by Microsoft's exclusionary conduct, Navigator was relegated to more 
costly and significantly less effective modes of distribution. The 
adverse business effects of these restrictions also deterred Netscape 
from undertaking technical innovations in Navigator that might have 
attracted consumers and revenues.
    Because of its reduced access to efficient distribution channels, 
Navigator's share of browser use fell precipitously. Even though 
Navigator's installed base of users increased during the browser war, 
the population of browser users expanded so quickly that Navigator's 
usage share fell dramatically even as its installed base grew. 
Navigator lost its ability to become the standard software for browsing 
the Web because Microsoft had successfully--and illegally--excluded 
Navigator from that status.
    b. Microsoft's Efforts To Extinguish Java. Microsoft also feared 
another middleware technology, Sun Microsystems' Java. Java software 
presented a means for overcoming the applications barrier to entry by 
enabling developers to write programs that could be ported to different 
operating systems with relative ease. Microsoft was concerned about 
Java because a key to maintaining and reinforcing the applications 
barrier to entry has been preserving the difficulty of porting 
applications from Windows to other platforms, and vice versa.
    Java software has four elements: a programming language; a set of 
``class libraries,'' which are Java programs that expose APIs on which 
developers writing in Java can rely; a compiler that translates the 
code written by the developer into Java ``bytecode''; and ``Java 
Virtual Machines'' (``JVMs''), programs that translate the Java 
bytecode into instructions comprehensible to the underlying system. The 
Java class libraries and JVM together form the ``Java runtime 
environment.'' If a software program relies only on APIs exposed by the 
Java Class libraries, it will run on any personal computer system 
carrying a Java runtime environment, no matter what operating system is 
on the computer. Therefore, Java applications require porting only to 
the extent that those applications rely directly on the APIs exposed by 
a particular operating system.
    In May 1995, Netscape announced that it would include a Sun-
compliant Windows JVM with every copy of Navigator, thereby creating 
the possibility that Sun's Java implementation would achieve the 
necessary ubiquity on Windows to pose a threat to the applications 
barrier to entry. Microsoft's determination to cripple cross-platform 
Java was an important reason for its concern about Navigator. Microsoft 
thus took, numerous steps to interfere with the development, 
distribution, and use of cross-platform Java. Those steps included: (1) 
Pressuring third parties not to support cross-platform Java; (2) 
seeking to extinguish the Java threat through technological means that 
maximized the difficulty with which applications written in Java could 
be ported from Windows to other platforms, and vice versa; and (3) 
other anticompetitive steps to discourage developers from creating Java 
applications compatible with non-Microsoft JVMs.
    Through its actions against Navigator and Java, Microsoft retarded, 
and perhaps extinguished altogether, the process by which these two 
middleware technologies could have facilitated the introduction of 
competition into the market for Intel-compatible personal computer 
operating systems.
4. Summary of Effects of Microsoft's Anticompetitive Conduct
    The Court of Appeals affirmed that, through its anticompetitive 
conduct, Microsoft has unlawfully protected and maintained its 
operating system monopoly in violation of section 2 of the Sherman Act.

IV. Explanation of the Proposed Final Judgment

    The Proposed Final Judgment seeks to eliminate Microsoft's illegal 
practices, to prevent recurrence of the same or similar practices and 
to restore the competitive threat that middleware products posed prior 
to Microsoft's

[[Page 59464]]

unlawful conduct. As discussed in further detail below, it seeks to 
achieve these goals by prohibiting Microsoft from engaging in specified 
activities, by requiring Microsoft to undertake certain other specified 
activities, by establishing a three-person independent Technical 
Committee (``TC'') to assist in enforcement and compliance, and by 
requiring Microsoft to establish an internal antitrust compliance 
program. The Proposed Final Judgment applies to Microsoft's conduct 
nationwide.
A. Scope of the Proposed Final Judgment
    A number of the definitions contained in the Proposed Final 
Judgment are essential to understanding the proper construction of the 
scope of the requirements and restrictions contained in the Proposed 
Final Judgment.
    ``Microsoft Middleware,'' a defined term, is the concept that 
triggers Microsoft's obligations, including those relating to 
Microsoft's licensing and disclosure obligations under sections III.D. 
and III.E., in this Proposed Final Judgment. Microsoft Middleware means 
software code that is distributed separately from a Windows Operating 
System Product to update that Windows Operating System Product, is 
Trademarked (as that term is defined in the Proposed Final Judgment), 
provides the same or substantially similar functionality as a Microsoft 
Middleware Product and, at a minimum, includes the software code that 
controls most or all of the user interface elements of the Microsoft 
Middleware. Microsoft typically develops and distributes a 
``redistributable'' associated with Microsoft Middleware Products. For 
instance, Microsoft offers a redistributable of Internet Explorer 6, 
which is a set of software code that is distributed separately under 
the Internet Explorer trademark and has the same functionality as 
Internet Explorer in Windows XP. This block of software code is the 
Microsoft Middleware that corresponds to the Internet Explore Microsoft 
Middleware Product. If such a redistributable exists, as they currently 
do for most Microsoft Middleware Products, then the redistributable is 
Microsoft Middleware. The primary purpose of the fourth requirement, 
that the Microsoft Middleware include at least the code that controls 
most or all of the user interface, is to ensure that the definition 
captures situations where no such redistributable exists, or where 
Microsoft chooses to divide up the software code that would otherwise 
have been a redistributable and to distribute that code not in one 
block but in various smaller blocks. In such cases, even though the 
first three requirements would be met, there could be uncertainty as to 
which of the smaller blocks of code constitute the Microsoft 
Middleware, particularly if some of the blocks are characterized by 
Microsoft as operating system updates. The fourth requirement sets a 
minimum functional requirement that in no case (regardless of the size 
of, or manner of, distributing the code) shall the software code 
constituting Microsoft Middleware be less than that which controls 
most, or all of, the user interface elements of that Microsoft 
Middleware.
    Software code distributed to update a Microsoft Middleware Product, 
such as an update to Internet Explorer, is Microsoft Middleware if it 
is a new ``major version'' of that Product: e.g., if it is identified 
by a new name or a new version number that consists of a whole number 
(e.g., ``7.0'') or a number with a single digit to the right of the 
decimal place (e.g., ``7.1''). This requirement is intended to focus 
the definition on code updates that provide commercially meaningful new 
or improved functionality, rather than simple bug fixes or patches, and 
uses Microsoft's current, regular versioning practices to differentiate 
minor fixes from more significant new versions.
    ``Microsoft Middleware Product,'' a defined term, is a concept 
critical to, among other things, identifying software to which user 
access and defaults must be made removable in favor of competing 
software pursuant to section III.H. Microsoft Middleware Product is 
broad; it covers not only a variety of existing products, but also sets 
forth an objective test for products not yet in existence that may 
become covered by the definition in the future. Existing products 
within this definition are those that include the functionality 
provided to users by a number of identified Microsoft products: 
Internet Explorer, Microsoft's Java Virtual Machine, Windows Media 
Player, Windows Messenger, and Outlook Express. The definition includes 
not only the functionality provided by these products, but also 
functionality provided by any successors to these products distributed 
by Microsoft. A future product would also be a Microsoft Middleware 
Product if it is first licensed, distributed or sold by Microsoft after 
entry of the Proposed Final Judgment as part of a Windows Operating 
System Product, and provides functionality similar to Internet 
browsers, email client software, networked audio/video client software, 
and instant messaging software. Thus, for example, future real time 
communications software that provides functionality similar to instant 
messaging software would be included, whether that software provides 
instant messaging via text, audio, and/or video. Alternately, future 
products would be encompassed within this definition if, in the year 
preceding commercial release of a new Windows Operating System Product, 
they are distributed separately from Windows, provide functionality 
similar to a Non-Microsoft Middleware Product, and are Trademarked.
    To be distributed separately from a Windows Operating System 
Product means that the software code is distributed separately from the 
original installation on a Personal Computer in any channel. Examples 
of channels include retail, separate installation by OEMs, downloads, 
inclusion with third-party software products, mass-mailings, and the 
Windows Update facility. Any software received in any of these channels 
after the original installation of a Windows Operating System Product 
is distributed separately from that Product. Software can be considered 
to be both part of a Windows Operating System Product and distributed 
separately from that Product.
    ``Non-Microsoft Middleware Product,'' a defined term, is the 
concept used, among other places, to identify software that may be 
installed in lieu of a Microsoft Middleware Product, as provided in 
Section III.H. Generally speaking, ``Non-Microsoft Middleware'' is 
third-party software that, similar to the browser, has the potential to 
create a competitive threat to Microsoft's Windows monopoly by lowering 
the applications barrier to entry. A Non-Microsoft Middleware Product 
is any software that both meets the definition of Non-Microsoft 
Middleware and has at least one million copies distributed in the 
United States within the previous year. This requirement of a minimal 
amount of actual distribution of such products is intended to avoid 
Microsoft's affirmative obligations--including the API disclosure 
required by Section III.D. and the creation of the mechanisms required 
by Section III.H.--being triggered by minor, or even nonexistent, 
products that have not established a competitive potential in the 
market and that might even be unknown to Microsoft development 
personnel.
    ``Non-Microsoft Middleware'' is any software: (I) Not licensed, 
distributed or sold by Microsoft; (ii) that is capable of running on a 
Windows Operating System Product; (iii) that itself provides APIs that 
can be invoked by ISVs to obtain a range of functionality; and (iv) 
that, if ported to or made to work with

[[Page 59465]]

a non-Microsoft Operating System, could make it easier for software 
applications that invoke its functionality to be ported to or run on 
such non-Microsoft Operating Systems.
    It was important to provide some limitations on these and other, 
related definitions, because not all software that exposes APIs would 
qualify as ``middleware'' with competitive significance for purposes of 
this case. While it is critical that meaningful, future middleware 
products be captured by the Proposed Final Judgment, such products may 
not always be readily identifiable as such. Without limitations on the 
definition, any software developer would be able to claim that any 
software product was middleware and thereby insist on exercising 
options and alternatives provided by the Proposed Final Judgment. The 
limits in the definitions ensure that the provisions of the Proposal 
Final Judgment apply to products that can credibly be said to pose, 
alone or in combination with other products, nascent threats to the 
applications barrier to entry.
    The definition of ``Trademarked'' is designed to ensure that the 
Microsoft Middleware and the Microsoft Middleware Products that 
Microsoft distributes (either for free or for sale) to the market as 
commercial products are covered by the Proposed Final Judgment. The 
definition of Trademarked in all respects applies equally to both 
trademarks and service marks.
    The definition has two categories. The first category covers 
products distributed in commerce under distinctive names or logos other 
than by the Microsoft or the Windows names by 
themselves. In order for such products to be Trademarked within the 
meaning of this definition, Microsoft must claim the name under which 
the product is distributed, or by which the product is identified, as a 
trademark or service mark in one of the following ways: (1) By marking 
the name with trademark notices in connection with a product 
distributed in the United States; (2) by filing an application for 
trademark protection for the name in the United States Patent and 
Trademark Office; or (3) by asserting the name as a trademark in the 
United States in a demand letter or lawsuit. As long as Microsoft makes 
a claim in one of these three ways, for any name other than 
Microsoft or Windows by itself, the definition is 
satisfied. For example, products distributed in commerce under, or 
identified by, the Windows Media name are covered.
    The second category covers products distributed in commerce under 
generic or descriptive terms or generic or descriptive terms in 
combination with either the Microsoft or the 
Windows name, where such terms of combinations of terms do 
not meet any of the three requirements for being claimed as a trademark 
or service mark outlined in connection with the first category. 
Microsoft expressly disclaims all rights in, and abandons any rights it 
may acquire in the future to, such generic or descriptive terms or 
combinations of generic or descriptive terms with either the 
Microsoft or the Windows name. Products falling 
within this second category are neither Microsoft Middleware nor 
Microsoft Middleware Products. The second category does not exempt from 
coverage as Trademarked any product distributed in commerce under, or 
identified by, marks that consist of any combination of generic or 
descriptive terms and a distinctive logo or other stylized 
presentation. For example, the mark MEDIA, although a generic term, 
would not fall within the second category if it were presented as a 
part of a distinctive logo or another stylized presentation because the 
mark itself would not be either generic or descriptive.
    The portion of this definition relating to Microsoft's disclaimer 
of certain trademarks or service marks and its abandonment of any 
rights to such trademarks or service marks in the future is designed to 
ensure that, to the extent that Microsoft distributes a product in 
commerce under generic or descriptive terms or generic or descriptive 
terms in combination with either the Microsoft or the 
Windows name and claims on that basis that such product does 
not fall within the definition of Microsoft Middleware or Microsoft 
Middleware Product, it must forever disclaim and abandon any rights to 
the name under which any such product is distributed in commerce.
    ``Windows Operating System Product'' means the software 
commercially distributed by Microsoft for use with Personal Computers 
under the names Windows 2000 Professional, Windows XP Home and 
Professional, and successors to these products. In general terms, it 
refers to Microsoft's line of ``desktop'' operating systems, as opposed 
to its server or other operating systems. Windows Operating System 
Product applies to software marketed under the listed names and 
anything marketed as their successors, regardless of how that software 
code is distributed, whether the software code is installed all at once 
or in pieces, or whether different license(s) apply.
    While the software code that comprises a Windows Operating System 
Product is determined by Microsoft's packaging decisions (i.e., by what 
it chooses to ship as ``Windows''), software code that is part of a 
Windows Operating System Product can also meet the requirements of 
other definitions, such as those for Microsoft Middleware and Microsoft 
Middleware Product. For example, Internet Explorer is both part of a 
Windows Operating System Product and a Microsoft Middleware Product.
B. Prohibited Conduct and Anticipated Effects of the Proposed Final 
Judgment
    Appropriate injunctive relief in an antitrust case should: (1) End 
the unlawful conduct; (2) ``avoid a recurrence of the violation'' and 
others like it; and (3) undo its anticompetitive consequences. See 
Nat'l Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679, 697 
(1978); United States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 
326 (1961); Int'l Salt Co. v. United States, 332 U.S. 392, 401 (1947); 
United States v. Microsoft Corp., 253 F.3d 34, 103, 107 (D.C. Cir. 
2001). Restoring competition is the ``key to the whole question of an 
antitrust remedy,'' du Pont, 366 U.S. at 326. Competition was injured 
in this case principally because Microsoft's illegal conduct maintained 
the applications barrier to entry into the personal computer operating 
system market by thwarting the success of middleware that would have 
assisted competing operating systems in gaining access to applications 
and other needed complements. Thus, the key to the proper remedy in 
this case is to end Microsoft's restrictions on potentially threatening 
middleware, prevent it from hampering similar nascent threats in the 
future and restore the competitive conditions created by similar 
middleware threats. The Proposed Final Judgment imposes a series of 
prohibitions on Microsoft's conduct that are designed to accomplish 
these critical goals of an antitrust remedy.
1. Section III.A.
    Section III.A. ensures that OEMS have the contractual and economic 
freedom to make decisions about distributing and supporting non-
Microsoft software products that have the potential to weaken 
Microsoft's personal computer operating system monopoly without fear of 
coercion or retaliation by Microsoft. The District Court found, and the 
Court of Appeals upheld, that OEMs are a crucial channel for the 
distribution and ultimate usage of non-Microsoft Middleware Products 
such as browsers. Accordingly, it is critical that the OEMs, through 
whom the large majority of

[[Page 59466]]

copies of Microsoft's Windows Operating System Products reach 
consumers, are free to choose to distribute and promote middleware 
without interference from Microsoft.
    Section III.A. broadly prohibits any sort of Microsoft retaliation 
against an OEM based on the OEM's contemplated or actual decision to 
support non-Microsoft software. Specifically, Microsoft is barred from 
retaliating by altering its existing commercial relations with an OEM 
based on the OEM's work with Non-Microsoft Middleware or Operating 
Systems. The existing Microsoft-OEM relationship provides a baseline 
against which any changes Microsoft makes in its treatment of that OEM 
for prohibited reasons can be detected and assessed. Microsoft is 
further prohibited from retaliating against OEMs by withholding newly-
introduced forms of non-monetary ``Consideration'' (a defined term 
referring to the various means available to Microsoft by which it can 
retaliate against or reward another firm; specifically, preferential 
licensing terms; technical, marketing, and sales support; enabling 
programs; product information; information about future plans; 
developer support; hardware or software certification or approval; or 
permission to display trademarks, icons or logos). For example, if 
Microsoft begins a new technical program or a new logo or software 
certification program that is not yet part of its existing commercial 
relations with an OEM, Microsoft cannot withhold the new Consideration 
from the OEM because the OEM is shipping or promoting products that 
compete with Microsoft Middleware or Operating Systems. Microsoft 
similarly cannot punish the OEM by withholding participation in a 
successor version of an existing form of Consideration, for example, in 
a logo program for calendar year 2003. This effectively bars Microsoft 
from using either money or the wide range of economic and commercial 
levers at its disposal to restrain OEM's support of competing software.
    Section III.A. is also broad in the range of OEM activities which 
Microsoft is prohibited from affecting through retaliation or coercion. 
Microsoft cannot retaliate against an OEM because Microsoft knows that 
the OEM either is or is contemplating: (I) Developing, distributing, 
promoting, using, selling, or licensing any software that competes with 
Microsoft Middleware or a Microsoft Operating System, or any product or 
service that distributes or promotes Non-Microsoft Middleware; (ii) 
shipping personal computers that have more than one operating system or 
that will ``dual boot'' into different operating systems; or (iii) 
exercising any other options or alternatives that are assured to OEMs 
by other provisions of the Proposed Final Judgment. Thus, OEMs will be 
assured the freedom to make independent decisions about the middleware 
and other operating systems they install, distribute and promote based 
on the demands of their customers and not on fear of retaliation by, or 
coercion from, Microsoft.
    Section III.A. does permit Microsoft to provide Consideration to an 
OEM for a particular Microsoft product or service where the 
Consideration is commensurate with the level or amount of the OEM's 
development, distribution, promotion or licensing of that product or 
service. Thus, Microsoft is limited to providing Consideration for a 
specific Microsoft product or service in return for the OEM supporting 
that product or service. Moreover, Microsoft can base such 
Consideration only on the absolute level or amount of the OEM's support 
for the Microsoft product or service, rather than on any relative level 
or amount.
    Finally, Section III.A. helps ensure the freedom of OEMs to make 
decisions about the software they install and promote free from 
Microsoft's influence by protecting the OEMs from having their vital 
licenses to Windows Operating System Products canceled without notice. 
Microsoft is barred from terminating the licenses of any of the 20 
largest and most competitively significant OEMs (defined as ``Covered 
OEMs'') without first giving written notice of the reasons for the 
proposed termination and not less than a 30-day opportunity to cure 
(except for a Covered OEM that has already received two such notices 
during the term of its license agreement). Without such protection, the 
threat that key OEMs could suddenly lose their Windows license, and 
that such loss is at Microsoft's discretion, could act as a powerful 
deterrent against OEMs taking the risk of promoting and distributing 
software that competes with Microsoft's.
2. Section III.B.
    In order to ensure freedom for the 20 Covered OEMs from the threat 
of Microsoft retaliation or coercion, Section III.B. requires that 
Microsoft's Windows Operating System Product licenses with such OEMs 
contain uniform terms and conditions, including uniform royalties. 
These royalties must be established by Microsoft in advance on a 
schedule that is available to Covered OEMs and the Plaintiffs.
    Windows license royalties and terms are inherently complex and easy 
for Microsoft to use to affect OEMs' behavior, including what software 
the OEMs will offer to their customers. By eliminating any opportunity 
for Microsoft to set a particular OEM's royalty or license terms as a 
way of inducing that OEM to decline to promote non-Microsoft software 
or retaliating against that OEM for its choices to promote non-
Microsoft software, this provision will ensure that OEMs can make their 
own independent choices. The provision permits Microsoft to employ 
volume discounts, but requires that such discounts be based on pre-set, 
legitimate volume levels.
    Section III.B. also prohibits Microsoft from using market 
development allowances (``MDAs'') or programs or other discounts to 
reward or retaliate against particular OEMs for the choices they make 
about installing and promoting Non-Microsoft Middleware or Operating 
Systems or for any other purpose that is inconsistent with the 
provisions of the Proposed Final Judgment. If Microsoft utilizes MDAs 
or similar discounts, they must be available and awarded uniformly to 
the ten largest OEMs on one discount scale and separately to the ten 
next largest on the same or another discount scale. In addition, the 
discounts must be based on objective, verifiable criteria that are 
applied uniformly. These restrictions ensure that Microsoft cannot use 
MDAs or other discounts to in any way discourage or prevent OEMs from 
choosing to favor, promote, or ship software that could threaten 
Microsoft's monopoly or otherwise from exercising the options and 
alternatives assured to OEMs by the Proposed Final Judgment.
    Section III.B. is limited to the 20 OEMs with the highest worldwide 
volume of licenses of Windows Operating System Products. Those OEMs 
together account for a substantial percentage of all Windows licenses 
and, consequently, ensuring their freedom to distribute and promote 
particular types of software that could erode Microsoft's monopoly is 
competitively significant.
3. Section III.C.
    Section III.C. of the Proposed Final Judgment prohibits conduct--
e.g., Microsoft's restrictions on an OEM's ability to remove or install 
desktop icons, folders and Start menu entries and to modify the initial 
boot sequence and to make certain alterations to the desktop--that the 
Court of Appeals found to be anticompetitive and unjustified. Section 
III.C. is designed to ensure that OEMs have the freedom to

[[Page 59467]]

configure the personal computers they sell by pre-installing, featuring 
and promoting Non-Microsoft Middleware or non-Microsoft Operating 
Systems, products that over time could help lower the applications 
barrier to entry. This Section prevents Microsoft from restricting a 
wide variety of actions OEMs may take to offer rival middleware to 
consumers and to feature that middleware in ways that increase the 
likelihood that consumers will choose to use it. Assuring this 
flexibility for OEMs is important to prevent the recurrence of conduct 
found to be illegal by the Court of Appeals and to help restore the 
competitive conditions that Microsoft's conduct undermined.
    Flexibility in Offering and Promoting Non-Microsoft Middleware: The 
first three subsections of Section III.C. prohibit Microsoft from 
restricting by agreement (any contract, requirement or understanding) 
OEMs from pre-installing, distributing, promoting or launching 
automatically Non-Microsoft Middleware or related products or services. 
Thus, for example, Microsoft may not include terms in a license 
agreement, Windows OEM preinstallation kit instructions, MDAs or other 
programs, or any other contractual document, that restrict OEMs' 
freedom to install and feature Non-Microsoft Middleware in the ways 
specified in subsections III.C.1-3.
    These subsections prevent Microsoft from restricting the freedom of 
OEM's to install and display icons, shortcuts, or menu entries both for 
Non-Microsoft Middleware and, more broadly, for any other product or 
service (including IAP products or services) that distributes, uses, 
promotes or supports Non-Microsoft Middleware. For example, an OEM may 
promote or install third-party offers for Internet access, subscription 
on-line music services, or Web-based applications that use or support 
Non-Microsoft Middleware such as an alternate browser, audio-video 
client software, or Java Virtual Machine. Subsection III.C.1. ensures 
that OEMs are free to install such products and services and to place 
icons, shortcuts or menu entries for them on the Windows desktop or 
Start menu.
    This subsection also provides OEMs the flexibility to display such 
icons, shortcuts, or menu entries anywhere else in Windows where a list 
of icons, shortcuts or menu entries for applications are generally 
displayed. For example, OEMs must be free to feature Non-Microsoft 
Middleware in the system tray and quick launch bar, ``right-click'' 
lists, ``open with'' lists and lists that appear based on an action or 
an event, such as connecting hardware or inserting an audio CD. 
Microsoft may specify that certain lists of icons, shortcuts, or menu 
entries are limited to products with particular types of functionality; 
for example, Microsoft may require that OEMs not place icons for media 
players or browsers in control panel windows that are limited to 
system-utility type functions, so long as any such requirements apply 
equally to Microsoft and non-Microsoft products. Thus, by way of 
example, Microsoft may reserve a particular list for multimedia 
players, but cannot specify either that the listed player be its own 
Window Media Player or that, whatever multimedia player an OEM chooses 
to list in that entry, it be capable of supporting a particular 
proprietary Microsoft data format. Such non-generic specification, 
which would have the effect of restricting the display of competing 
Non-Microsoft Middleware, would not be ``non-discriminatory'' as 
required by subsection III.C.1.
    Subsection III.C.2. prevents Microsoft from restricting an OEM's 
ability to distribute or promote Non-Microsoft Middleware by installing 
and displaying on the Windows desktop shortcuts of any size or shape, 
so long as the shortcut is not of a size or shape that effectively 
impairs the functionality of the user interface. Thus, Microsoft could 
prevent an OEM from installing a large ``shortcut'' that covered the 
Start button or obscured the entirety of the Windows user interface, 
but could not generally ban OEMs from installing large or differently-
shaped shortcuts.
    Subsection III.C.3. requires that Microsoft permit OEMs to 
configure their products to launch Non-Microsoft Middleware 
automatically at the conclusion of the first boot sequence or 
subsequent boot sequences or upon connection to or disconnection from 
the Internet, if Microsoft has configured any of its Microsoft 
Middleware Products that provide similar functionality to do so. Thus, 
if Microsoft configured its products automatically to launch 
functionality provided by a Microsoft Middleware Product on boot-up or 
in conjunction with an Internet session, an OEM must be free instead to 
launch automatically similar functionality of Non-Microsoft Middleware. 
For example, if Microsoft configured its Windows Media Player 
automatically to launch in a personal computer's memory upon boot-up or 
connection to the Internet, an OEM could instead automatically launch a 
competing media player upon those same events.
    The only other limitation Microsoft may impose on OEMs in this 
circumstance is that any Non-Microsoft Middleware the OEM configures to 
launch automatically cannot display a user interface that is not of 
similar size and shape as the Microsoft Middleware Product user 
interface that would otherwise launch automatically. For example, if 
Windows Messenger automatically launches after connection to the 
Internet, but only appears in the system tray, an OEM may configure a 
competing instant messaging client to launch automatically at the same 
time, but that product also must appear only in the system tray and not 
display the full user interface.
    Flexibility to Offer Alternate Operating Systems and ``Dual Boot'' 
Personal Computers: Subsection III.C.4. ensures that OEMs will be free, 
if they choose, to offer users the option of launching other operating 
Systems during the personal computer's boot-up, either from the initial 
BIOS program or from a non-Microsoft boot loader that launches prior to 
the start of the Windows Operating System Product. This provision 
forbids Microsoft from stopping OEMs from offering ``dual-boot'' 
systems--computers that give users the choice of either launching a 
Windows Operating System Product or another general- or special-purpose 
Operating System--on the same personal computer.
    OEM-Specific IAP Offers in the Bootup Sequence: Subsection III.C.5. 
ensures that OEMs will be free to create and display in the initial 
Windows boot sequence a customized offer for the user to choose his or 
her IAP. Microsoft may limit such offers only by requiring that they 
comply with ``reasonable technical specifications,'' including a 
requirement that the initial boot sequence be completed upon conclusion 
of any such offer. Because a user's IAP can be an important source of 
choices about various middleware for the user, ensuring OEM freedom to 
offer customized IAP offers during the initial boot process can have 
substantial competitive value.
    No Contractual Restrictions on OEMs Exercising Other Options in the 
Decree: Finally, subsection III.C.6. prohibits Microsoft from 
restricting by agreement an OEM's right to exercise any of the 
technical configuration options that Microsoft must make available to 
OEMs under Section III.H., discussed below. This ensures that Microsoft 
cannot prohibit or impede by contract an OEM's access to or use of what 
Microsoft must make available through technical facilities in its 
Windows Operating System Products.
4. Section III.D.
    Section III.D. of the proposed Final Judgment requires Microsoft to 
disclose

[[Page 59468]]

to ISVs, IHVs, IAPs, ICPs and OEMs all of the interfaces and related 
technical information that Microsoft Middleware uses to interoperate 
with any Windows Operating System Product. This provision ensures that 
developers of competing middleware--software that over time could begin 
to erode Microsoft's Operating System monopoly--will have full access 
to the same interface and related information as Microsoft Middleware 
has to interoperate with Windows Operating System Products. Microsoft 
will not be able to hamper the development or operation of potentially 
threatening software by withholding interface information or permitting 
its own products to use hidden or undisclosed interfaces.
    Section III.D. requires disclosure of ``Application Programming 
Interfaces'' or ``APIs,'' which are the interfaces, including any 
associated callback interfaces, that Microsoft Middleware running on a 
Windows Operating System Product uses to call upon that Windows 
Operating System Product in order to obtain services from it. 
``Interfaces'' includes, broadly, any interface, protocol or other 
method of information exchange between Microsoft Middleware and a 
Windows Operating System Product.
    Section III.D. also requires that Microsoft disclose 
``Documentation,'' which means all the technical information regarding 
the identification and means of using APIs that a programmer of 
ordinary skill requires to make effective use of those APIs. 
Documentation refers to such information that is of the sort and to the 
level of specificity, precision and detail that Microsoft currently 
provides to ISVs and others through the Microsoft Developer's Network 
(``MSDN''). Through its MSDN service, Microsoft presently makes widely 
available on the Internet an extensive and detailed catalog of 
technical information that includes, among other things, information 
about most Windows APIs for use by developers to create various Windows 
applications. MSDN access is presently broadly available to developers 
and other interested third parties. If in the future Microsoft uses 
another mechanism for disclosure of such information, that mechanism 
must be similar in scope and availability to that provided today via 
MSDN.
    Microsoft Must Disclose All APIs and Related Documentation: Section 
III.D. requires Microsoft to disclose to ISVs, IHVs, IAPs, ICPs and 
OEMs the APIs and related Documentation that any Microsoft Middleware 
uses to interoperate with a Windows Operating System Product. Third 
parties may then use those APIs and related Documentation for the 
purpose of ensuring that their products interoperate with Windows 
Operating System Products. Microsoft is to provide these disclosures 
via MSDN or similar mechanisms.
    Microsoft's initial obligation to provide the disclosures of APIs 
and related Documentation under this section arises when Microsoft 
releases the upcoming first Service Pack for Windows XP, or twelve 
months after November 6, 2001 (the date the Proposed Final Judgment was 
presented to the Court), whichever occurs first. Thereafter, Microsoft 
is under a continuing obligation to disclose additional APIs and 
Documentation. Whenever Microsoft develops an updated version of a 
Windows Operating System Product, it must disclose all relevant APIs 
and Documentation in a ``Timely Manner,'' meaning at the time Microsoft 
first releases a widespread beta test version of that Windows Operating 
System Product (i.e., one made available to 150,000 or more beta 
testers). If, alternatively, Microsoft develops a new ``major version'' 
of Microsoft Middleware, it must disclose any APIs and Documentation 
used by that Middleware to interoperate with any Windows Operating 
System Product not later than the release of the last major beta 
version of that middleware (i.e., the version before the release of any 
``release candidate'' version of the middleware). This dual-timing 
trigger mechanism is important to ensure that ISVs and other third 
parties learn of all relevant APIs and the information needed 
effectively to use them well in advance of the actual commercial 
releases of the relevant Microsoft software, so that the third parties 
can ensure that their own competing products function on and 
interoperate with Windows.
    The effect of Section III.D. is to assure to Non-Microsoft 
Middleware meaningful access to the same services provided by the 
operating system as those available to Microsoft Middleware. Microsoft 
Middleware will not have access to any hidden or proprietary features 
of Windows Operating System Products that might allow it to operate 
more effectively. For example, going forward under this provision, the 
APIs and related Documentation for the Secure Audio Path digital rights 
management service that is part of Windows XP must be disclosed and 
made available for use by competing media players in interoperating 
with Windows XP.
5. Section III.E.
    Section III.E. of the Proposed Final Judgment ensures that ISVs 
will have full access to, and be able to use, the protocols that are 
necessary for software located on a server computer to interoperate 
with, and fully take advantage of, the functionality provided by any 
Windows Operating System Product. The competitive significance of most 
Non-Microsoft Middleware, including the browser and Java Virtual 
Machine against which much of Microsoft's illegal conduct was directed, 
was and will continue to be highly dependent on content, data and 
applications residing on servers and passing over networks such as the 
Internet or corporate networks to that middleware running on personal 
computers. Section III.E. will prevent Microsoft from incorporating 
into its Windows Operating System Products features or functionality 
with which its own server software can interoperate, and then refusing 
to make available information about those features that non-Microsoft 
servers need in order to have the same opportunities to interoperate 
with the Windows Operating System Product.
    The terms ``Communications Protocols'' and ``server operating 
system product'' are used throughout this Section. ``Communications 
Protocols'' are what Microsoft must make available to third parties. 
Communications Protocol is broadly defined to mean the set of rules for 
information exchange to accomplish predefined tasks between a Windows 
Operating System Product and a sever operating system product connected 
through any type of network, including, but not limited to, a local 
area network, wide area network, or the Internet. These rules govern 
the format, semantics, timing, sequencing, and error control of 
messages exchanged over a network. Every protocol that is implemented 
in a Windows Operating System Product and that can be used to 
interoperate with servers without other software being added to that 
Windows Operating System Product must be made available by Microsoft 
for third parties to license at all layers of the communications stack.
    The term ``server operating system product'' includes, but is not 
limited to, the entire Windows 2000 Server product families and any 
successors. All software code that is identified as being incorporated 
within a Microsoft server operating system and/or is distributed with 
the server operating system (whether or not its installation is 
optional or is subject to supplemental license agreements) is 
encompassed by

[[Page 59469]]

the term. For example, a number of server software products and 
functionality, including Internet Information Services (a ``web 
server'') and Active Directory (a ``directory server''), are included 
in the commercial distribution of most versions of Windows 2000 Server 
and fall within the ambit of ``server operating system product.''
    Microsoft Must Make Available All Communications Protocols: 
Starting nine months after submission of the Proposed Final Judgment to 
the Court, Section III.E. will impose on Microsoft a continuing 
obligation to license on reasonable and non-discriminatory terms the 
Communications Protocols implemented in a Windows Operating System 
Product that are used by a Microsoft server operating system product to 
interoperate with that Windows Operating System Product without the 
addition of other software to the client computer. If a Microsoft 
server interoperates with a Windows Operating System Product such as 
Windows 2000 Professional or Windows XP Home or Professional using any 
Communications Protocol that is part of that client operating system 
(that is, without additional software code being added to the client), 
then that Protocol must be made available to third parties. Protocols 
implemented in Windows Operating System Products on or after November 
6, 2001 (the date this Protocol Final Judgment was submitted to the 
Court), must always be available for license. If, in the future, 
Microsoft chooses not to implement a new or modified protocol in a 
Windows Operating System Product, but instead only distributes the code 
that implements that protocol along with its server software or 
otherwise separately from the client operating system, as other server 
software vendors must do, then Microsoft will not be required by this 
Section to license that protocol. Because the Communications Protocols 
must be licensed ``for use'' by such third parties, the licensing 
necessarily must be accompanied with sufficient disclosure to allow 
licenses fully to utilize all the functionality of each Communications 
Protocol.
    This provision will protect opportunities for the development and 
use of Non-Microsoft Middleware by ensuring that competing, non-
Microsoft server products on which such Middleware can be hosted and 
served will have the same access to and ability to interoperate with 
Windows Operating System Products as do Microsoft's server operating 
systems. Thus, if a Windows Operating System Product is using all the 
Communications Protocols that it contains to communicate with two 
servers, one of which is a Microsoft server and one of which is a 
competing server that has licensed and fully implemented all the 
Communications Protocols, the Windows Operating System Product should 
behave identically in its interaction with both the Microsoft and non-
Microsoft servers.
    Section III.E. will permit seamless interoperability between 
Windows Operating System Products and non-Microsoft servers on a 
network. For example, the provision requires the licensing of all 
Communications Protocols necessary for non-Microsoft servers to 
interoperate with the Windows Operating System Products' implementation 
of the Kerberos security standard in the same manner as do Microsoft 
servers, including the exchange of Privilege Access Certificates. 
Microsoft must license for use by non-Microsoft server operating system 
products the Communications Protocols that Windows Operating System 
Products use to enable network services through mechanisms such as 
Windows server message block protocol/common Internet file system 
protocol communications, as well as Microsoft remote procedure calls 
between the client and server operating systems. Communications 
Protocols that permit a runtime environment (e.g., a Java Virtual 
Machine and associated class libraries or competing functionality such 
as the Common Language Runtime) to receive and execute code from a 
server also will be required to be licensed for use by non-Microsoft 
servers if those protocols are implemented in a Windows Operating 
System Product.
    Section III.E. must be read in conjunction with subsection 
III.J.1.a., which exempts from these licensing requirements certain 
very limited and specific portions or layers of Communications 
Protocols which would, if disclosed, compromise the system security 
provided by Microsoft anti-piracy, anti-virus, software licensing, 
digital rights management, encryption and authentication features. The 
exception provided by subsection III.J.1.a. is a narrow one, limited to 
specific end-user implementations of security items such as actual 
keys, authorization tokens or enforcement criteria, the disclosure of 
which would compromise the security of ``a particular installation or 
group of installations'' of the listed security features. For example, 
this subsection permits Microsoft to withhold limited information 
necessary to protect particular installations of the Kerberos and 
Secure Audio Path features of its products (e.g., keys and tokens 
particular to a given installation), but does not permit it to withhold 
any capabilities that are inherent in the Kerberos and Secure Audio 
Path features as they are implemented in a Windows Operating System 
Product. This is a critical distinction, because it ensures that 
Section III.E. will make these features available to competing software 
and hardware developers and permit them to offer competing 
implementations of these features, and products that rely on them, that 
can do the same things as Microsoft implementations of these features, 
while protecting the integrity of actual, particular end-user 
implementations of those systems.
6. Section III.F.
    Section III.F. prohibits Microsoft from retaliating against 
software and hardware developers based upon either: (i) Those 
developers' development use, distribution, promotion or support of any 
software that competes with Microsoft Middleware or Operating System 
software or any software that runs on such competing software; or (ii) 
those developers' attempts to exercise the options or alternatives 
provided for under the Proposed Final Judgment. This section redresses 
conduct by Microsoft specifically found unlawful by the District Court 
and the Court of Appeals. It prohibits any retaliatory action by 
Microsoft, while at the same time affording Microsoft a limited 
opportunity to enter into certain contractual agreements with software 
developers that limit the developers' ability to promote such competing 
software if such limitations are reasonably necessary to, and of 
reasonable scope and duration in relation to, certain bona fide 
contractual obligations of the software developer.
    Subsection III.F.1. embodies the basic prohibitions against 
retaliation contained in Section III.F. Subsection III.F.1.a. 
explicitly prohibits Microsoft from retaliating against software or 
hardware developers that choose to develop, use, distribute, promote or 
support software that competes with Microsoft Platform Software or any 
software that runs on such competing software. Similarly, Subsection 
III.F.1.b. makes explicit that Microsoft is precluded from engaging in 
conduct that frustrates the purpose of the provisions contained in the 
Proposed Final Judgment. Thus, Subsection III.F.1.b. ensures that ISVs 
and IHVs are free to exercise the options and alternatives available to 
them under the Proposed Final Judgment without fear of retaliation from 
Microsoft for doing so.

[[Page 59470]]

    Subsection III.F.2. prohibits agreements relating to Windows 
Operating System Products in which a grant of Consideration by 
Microsoft is conditioned upon a software developer refraining from 
developing, using, distributing, or promoting any software that 
competes wither with Microsoft Platform Software or any software that 
runs on such competing software. This subsection contains a limited 
exception that permits Microsoft to enter into such agreement where 
such agreements are reasonably limited in scope and duration and 
reasonably necessary to effectuate bona fide contractual relationships 
between Microsoft and any ISV relating to the use, distribution or 
promotion of Microsoft software or the development of software, for, or 
in conjunction, with Microsoft. This subsection prevents Microsoft from 
entering into agreements with an ISV pursuant to which, for no bona 
fide purpose, the ISV is prevented from developing, using, distributing 
or promoting software that rivals Microsoft's, while still permitting 
ISVs, as they choose, to benefit from legitimate agreements to use or 
promote Microsoft products. For example, Microsoft could enter into an 
agreement with an ISV pursuant to which it provides funds to the ISV 
that can only be used to promote Microsoft software and not rival 
software; such a restriction would be ``reasonably necessary to and of 
reasonable scope and duration in relation to a bona fide contractual 
obligations of the ISV. * * *''
    Finally, subsection III.F.3. makes clear that nothing in Section 
III.F. prohibits Microsoft from enforcing either its agreements with 
ISVs and IHVs or its legitimate intellectual property rights unless 
doing so is inconsistent with any provision of the Proposed Final 
Judgment. This subsection again emphasizes that Microsoft may not take 
any actions, including those relating to the enforcement activities 
identified in this subsection, that frustrate the purpose of the 
provisions contained in the Proposed Final Judgment.
7. Section III.G.
    Section III.G. of the Proposed Final Judgment prohibits Microsoft 
from entering into exclusionary agreements with a variety of firms. 
Subsection III.G.1 forbids agreements in which Microsoft grants 
Consideration to any IAP, ICP, ISV, IHV or OEM conditioned on that 
firm's exclusive distribution, promotion, use or support of Microsoft 
Middleware or Windows Operating Systems Products (defined as 
``Microsoft Platform Software''). This prohibition will forbid 
Microsoft from using either money or the wide range of commercial 
blandishments at its disposal (encompassed in the defined term 
``Consideration'') to hinder the development and adoption of products 
that, over time, could emerge as potential platform threats to the 
Windows monopoly. Thus, this provision would bar Microsoft from 
entering into agreements like the ``First Wave'' agreements with ISV's 
whose provisions regarding Java and the browser the Court of Appeals 
found to be exclusive in effect and illegal.
    Subsection III.G.1. further prohibits agreements in which Microsoft 
grants Consideration conditioned on a firm's distribution, promotion, 
use or support of Microsoft Middleware or Operating Systems Products in 
a fixed percentage, since such agreements in practice can serve to 
exclude rival products. Microsoft is permitted to utilize fixed 
percentage contracts only in the specific case where the other party to 
the agreement expressly represents that it is ``commercially 
practicable'' for it to undertake equally extensive or greater 
distribution, promotion, use or support of non-Microsoft software that 
competes with Microsoft Platform Software. For example, Microsoft could 
not grant preferential marketing, technical or other support to an ISV 
on the condition that the ISV ship the Windows Media Player along with 
70% of the shipments of the ISV's products, unless the ISV 
affirmatively states that it is commercially practicable for it also to 
ship competing media players with at least the same (or greater) number 
of its shipments. This provision is necessitated by the business 
reality that a fixed percentage requirement, even one that on its face 
requires less than full exclusivity, frequently will operate as an 
exclusive or near-exclusive requirement in practice because the other 
party is unable, due to capacity or other resource constraints, also to 
deal with competing products. On the other hand, when the other 
percentage requirement is less likely to operate as an exclusive, and 
may have pro-competitive benefits.
    Subsection III.G.1. requires that Microsoft obtain any such 
``commercially practicable'' representation from firms only in good 
faith, in other words, with a reasonable belief that the representation 
is accurate. Plainly, Microsoft could not in ``good faith'' make this 
representation a standard part of its agreements with all IAPs, ICPs, 
ISVs, IHVs or OEMs, nor could it insist on or coerce such a 
representation where the third party did not independently and 
affirmatively evaluate and conclude that the representation would be 
true. Such statements must be genuine and bona fide, and the decision 
whether or not to make them is entirely within the judgment of the 
third party.
    Subsection III.G.2. prohibits Microsoft from entering into any 
agreement that conditions placement on the Windows desktop or anywhere 
else in a Windows Operating System Product of an IAP's or ICP's 
software, services, content or other material on its agreement to 
refrain from distributing, promoting, or using software that competes 
with Microsoft Middleware. The Court of Appeals upheld the conclusion 
that Microsoft violated Section 2 by explicitly conditioning valuable 
consideration--specifically the provision of easy access to IAP's 
services from the Windows desktop--on the IAPs' agreements to restrict 
distribution and promotion of the competing Navigator browser and 
instead to promote Microsoft's Internet Explorer exclusively. 253 F.3d 
at 68-69. Such agreements are barred by this subsection.
    The restrictions in Section III.G. will not interfere with 
Microsoft's ability to engage in legitimate joint activities with ISV's 
IHVs, IAPs, ICPs or OEMs. Microsoft may enter into bona fide joint 
ventures or joint development or services arrangements for the creation 
of new or materially improved products, technologies or services that 
prohibit the other party from competing with the object of the joint 
venture for a reasonable period of time, but only so long as the 
arrangements involve the legitimate and substantial shared contribution 
of resources that necessarily characterize procompetitive 
collaborations. By limiting the joint agreement exception to activities 
that meet these conditions, Section III.G. ensures that Microsoft 
cannot use the exception to attempt to evade the prohibitions and to 
engage in exclusionary contracts in the course of normal commercial 
relations between it and ISVs, IHVs, IAPs, ICPs and OEMs.
    Finally, Section III.G. does not apply to agreements in which 
Microsoft licenses intellectual property in from a third party. This 
licensing-in exception would, for instance, permit Microsoft to license 
new technology from an ISV for incorporation into Windows on the 
condition that the ISV not license the same technology for 
incorporation into any other personal computer operating system. Such 
an exception is consistent with the competitive goals of the Proposed 
Final Judgment because it preserves Microsoft's incentive to invest in 
successfully using and promoting the intellectual property that it 
licenses from others. This licensing-in exception

[[Page 59471]]

to Section III.G. does not permit Microsoft to enter into agreements, 
otherwise prohibited by Section III.G., that contain overboard terms 
not reasonably related to the licensing-in of intellectual property.
8. Section III.H.
    Section III.H. of the Proposed Final Judgment addresses Microsoft's 
illegal use of license restrictions and other actions (such as the 
withdrawal of removal options from OEMs and end users) to exclude rival 
middleware products. This Section ensures that OEMs will be able to 
choose to offer and promote, and consumers will be able to choose to 
use, Non-Microsoft Middleware Products such as Internet browsers, media 
players, instant messaging programs, and email software. In particular, 
this Section requires Microsoft to provide the ability for OEMs 
(through standard preinstallation kits) and end users (through a 
mechanism such as an Add/Remove utility) to customize their personal 
computers by removing access to, and automatic invocation of, Microsoft 
Middleware Products, and by replacing those products with competing 
Non-Microsoft Middleware Products.
    Because Microsoft must make certain technical changes to its 
Windows 2000 and Windows XP Windows Operating System Products to comply 
with Section III.H., its requirements will become effective upon the 
release of the first Service Pack for Windows XP or 12 months after 
submission of the Proposed Final Judgment to the Court, whichever is 
earlier.
    With respect to any new (i.e., post-Windows XP) Windows Operating 
System Product, Microsoft's obligations under this Section will be 
determined based on the Microsoft Middleware Products that exist 7 
months prior to the last beta test version of that new Windows 
Operating System Product. This time period similarly is intended to 
give Microsoft the opportunity to make necessary product changes.
    For a discussion of the definitions of ``Non-Microsoft Middleware 
Product,'' ``Non-Microsoft Middleware'' and ``Microsoft Middleware 
Product,'' terms which are used throughout this Section, see Section 
IV.A., supra.
    End User Access Requirements: Subsection III.H.1. requires 
Microsoft to allow end users and OEMs to enable or remove access to, 
and enable or disable automatic invocations of, any Microsoft 
Middleware Product and Non-Microsoft Middleware Product. Consumers must 
be given the ability to make or reverse choices and to switch easily 
back and forth between the configurations. For example, Microsoft 
cannot offer end users or OEMs an option of eliminating access to or 
default invocation of all Non-Microsoft Middleware Products unless 
Microsoft permits an equally-obvious and accessible option to undo this 
choice and restore all Non-Microsoft Middleware Products and defaults.
    The mechanism used to offer these choices must be unbiased; that 
is, it must not present the choices of removing or enabling access or 
defaults in any way that favors Microsoft's products over third-party 
products. The mechanism must offer a separate choice for each 
middleware product, though it may also offer a choice of enabling all 
of the Non-Microsoft Middleware Products or all of the Microsoft 
Middleware Products as a group.
    Microsoft must allow the enabling or removal of access to Microsoft 
Middleware Products and Non-Microsoft Middleware Products via the 
desktop and Start Menu, as well as anywhere else in a Windows Operating 
System Product where lists of icons, shortcuts or menu entries are 
generally displayed. For instance, Microsoft must allow Non-Microsoft 
Middleware Products to appear in the system tray and quick launch bar, 
``right-click'' lists, ``open with'' lists, and lists that appear based 
on an event, such as inserting an audio CD. Microsoft may restrict the 
types of applications that go in these lists only based on 
functionality, as long as the restrictions are non-discriminatory with 
respect to non-Microsoft and Microsoft products. For example, Microsoft 
could require that programs be capable of interacting with or playing 
audio files in order to be listed when an audio CD is inserted. Because 
these functionality requirements must be non-discriminatory, competing 
Non-Microsoft and Microsoft Middleware Products will always be given 
the same opportunity for placement in these points of access.
    Automatic (``Default'') Launching of Competing Middleware: 
Subsection III.H.2. requires Microsoft to allow end users, OEMs and 
Non-Microsoft Middleware Products to designate Non-Microsoft Middleware 
Products to be invoked automatically in place of Microsoft Middleware 
Products, and vice versa. Microsoft is required to provide these points 
for automatically launching competing middleware, commonly referred to 
as ``defaults,'' in every case where the displaced Microsoft Middleware 
Product would be invoked in a separate Top-Level Window and display 
either all of that product's user interface elements or its Trademark. 
This requirement is designed to ensure that access to defaults exists 
whenever the alternative Microsoft product would be launched as the 
full ``product'' (e.g., Internet Explorer as the Internet browser), 
rather than just a portion of its underlying functionality being 
launched to perform functions in Windows itself (such as code also used 
by Internet Explorer being used to display part of the Windows user 
interface), or otherwise where the end user might not necessarily be 
aware that he or she was using a specific Microsoft Middleware Product. 
Whereas up to now it has been completely in Microsoft's discretion 
where, and even if, ``default'' launching of competing products occurs, 
Subsection III.H.2. will ensure that Microsoft must allow competing 
programs to be automatically invoked in numerous competitively 
significant instances.
    Preservation of OEM Configuration: Subsection III.H.3. prohibits 
Microsoft from designing its Windows Operating System Products to 
automatically alter an OEM's configuration choices--such as 
``sweeping'' the unused icons the OEM has chosen to place on the 
Windows desktop--without first seeking confirmation from the user, and 
from attempting any such alteration before at least 14 days after the 
consumer has first booted his or her personal computer. Thus, for 
example, in Windows XP, the Clean Desktop Wizard cannot run at all 
until 14 days after the first boot and then not without seeking the 
user's confirmation to move the unused icons. Additionally, Microsoft 
cannot change the manner in which a Windows Operating System Product 
makes automatic alterations other than in new versions of a Windows 
Operating System Product.
    Finally, subsection III.H. permits Microsoft to override existing 
defaults to Non-Microsoft Middleware Products only when: (I) A 
Microsoft Middleware Product would be invoked solely for use in 
interoperating with a server maintained by Microsoft (outside the 
context of general web browsing--for example, in the case of the 
Windows Help feature of Windows); or (ii) the designated Non-Microsoft 
Middleware Product fails to implement a reasonable technical 
requirement that is necessary for valid technical reasons to supply the 
end user with functionality consistent with a Windows Operating System 
Product, In the latter case, the valid technical reasons must be 
described in a reasonably prompt manner to any ISV that requests them.

[[Page 59472]]

9. Small III.I.
    Section III.I. requires Microsoft to offer necessary related 
licenses for the intellectual property that is required to disclose 
pursuant to the terms of the Proposed Final Judgment (e.g., the 
disclosures required pursuant to Sections III.D. and III.E.). This 
Section is designed to ensure that such intellectual property may 
actually be used by an entity to which the information is disclosed; it 
prohibits Microsoft from thwarting the intended goals of the disclosure 
provisions either by withholding necessary intellectual property 
licenses or by providing such licenses in an unreasonable or 
discriminatory fashion. The overarching goal of this Section is to 
ensure that Microsoft cannot use its intellectual property rights in 
such a way that undermines the competitive value of its disclosure 
obligations, while at the same time permitting Microsoft to take 
legitimate steps to prevent unauthorized use of its intellectual 
property.
    Subsections III.I.1 and III.I.4 are designed specifically to 
prevent Microsoft from using its intellectual property rights to 
frustrate the intended effectiveness of the Proposed Final Judgment's 
disclosure provisions. Subsection III.I.1. requires that any licenses 
granted pursuant to this Section be made on reasonable and non-
discriminatory terms. Microsoft may not impose unreasonable or 
discriminatory royalties or other terms as a mechanism for subverting 
the disclosure or other requirements of the Proposed Final Judgment, 
which are essential to the efficacy of the relief it affords. 
Similarly, subsection III.I.4 is designed to guarantee the 
effectiveness of the disclosure provisions by prohibiting Microsoft 
from including any terms in any licenses granted pursuant to this 
Section that subvert the terms of the Proposed Final Judgment.
    While the Department's foremost concern regarding Section III.I. is 
to ensure the effectiveness of the disclosure provisions of the 
Proposed Final Judgment, it also recognizes that Microsoft has a 
legitimate interest in limiting its intellectual property licensing to 
those licenses that are property related to the terms of the Proposed 
Final Judgment. Subsections III.I.2. and III.I.3 are thus designed to 
address this issue. Subsection III.I.2. makes clear that licenses 
granted pursuant to this Section III.I. need be no broader than 
necessity to permit ISVs, IHVs, IAPs, ICPs or OEMs to exercise the 
options or alternatives provided under the Proposed Final Judgment. 
Likewise, subsection III.I.3 permits Microsoft to preclude the 
assignment, transfer or sublicensing of rights by Microsoft pursuant to 
Section III.I., provided that any such preclusion is reasonable and 
non-discriminatory as required by subsection III.I.1.
    Subsection III.I.5. provides that, to the extent that an ISV, IHV, 
IAP, ICP, or OEM has any intellectual property relating to its exercise 
of the options or alternatives provided by the revised proposed Final 
Judgment, then that ISV, IHV, IAP, ICP, or OEM may be required to grant 
Microsoft a license to any such intellectual property rights on 
reasonable and nondiscriminatory terms, if such a cross-license is 
necessary for Microsoft to provide the options or alternatives set 
forth in the revised proposed Final Judgment and exercised by the 
particular ISV, IHV, ICP or OEM. This subsection is thus designed to 
ensure that Microsoft is able fully to comply with the terms of the 
revised proposed Final Judgment without creating greater infringement 
liability for itself than it would otherwise have. This subsection 
limits Microsoft's access to third-party intellectual property rights 
through the expressed limitations on the scope of any such cross-
licenses. Therefore, Microsoft will only be entitled to obtain such a 
license if a license to the ISV's, IHV's, ICPs, IAP's or OEM's 
intellectual property is necessary for Microsoft to do its part in 
ensuring the effective exercise of the options or alternatives set 
forth in the revised proposed Final Judgment. For example, a company 
might have a patent on a feature that relates to the interrelationship 
between the company's system and the operating system, such as a 
feature that manages operating system resources by making particular 
calls to the operating system. If, pursuant to the Final Judgment, 
Microsoft is required to disclose interfaces that might be used by 
others to support a similar feature in the same fashion, and if the 
patent-holder seeks a license to exercise any options provided under 
this Final Judgment, Microsoft is correspondingly entitled by this 
provision to obtain a limited license to the patent so that Microsoft 
can comply with its obligation to disclose and license the interface 
without subjecting itself to claims of direct or contributory 
infringement of the patent.
10. Section III.J.
    Section III.J. addresses several security-related issues that may 
arise from the broad disclosures required of Microsoft by the Proposed 
Final Judgment. Subsection III.J.1.a. permits Microsoft to withhold 
from disclosure or licensing certain specific, limited portions of 
APIs, Documentation, and Communications Protocols that would, if 
disclosed, compromise the system security provided by a particular 
installation or group of installations of Microsoft anti-piracy, anti-
virus, software licensing, digital rights management, encryption or 
authentication features. This is a narrow exception, limited so 
specific end-user implementations of security items such as actual 
keys, authorization tokens or enforcement criteria, the disclosure of 
which would compromise the security of ``a particular installation or 
group of installations'' of the listed security features. For example, 
this subsection permits Microsoft to withhold limited information 
necessary to protect particular installations of the Kerberos and 
Secure Audio Path features of its products (e.g., keys and tokens 
particular to a given installation), but does not permit it to withhold 
any capabilities that are inherent in the Kerberos and Secure Audio 
Path features as they are implemented in a Windows Operating System 
Product.
    Subsection III.J.1.b. is intended to permit Microsoft to comply 
with lawful orders of official government agencies not to disclose, on 
security grounds, certain APIs or information that Microsoft otherwise 
would be required to disclose pursuant to this Proposed Final Judgment. 
This exception only exempts Microsoft from its disclosure obligation in 
the narrow situation where the direction not to disclose is made 
lawfully by a government agency of competent jurisdiction, and only to 
the extent and within the scope of that specific jurisdiction.
    Subsection III.J.2. permits Microsoft to take certain limited steps 
to ensure that any disclosure of licensing of APIs, Documentation, or 
Communications Protocols related to anti-piracy systems, anti-virus 
technologies, license enforcement mechanisms, authentication/
authorization security, or third party intellectual property protection 
mechanisms it makes pursuant to this Proposed Final Judgment is to 
third parties that have a legitimate need for and do not pose a 
significant risk of misusing that information. Subsection III.J.2.a. 
allows Microsoft to condition such disclosure or licensing on the 
recipient or licensee: (a) Having no history of software counterfeiting 
or piracy or willful violations of intellectual property rights; (b) 
having a reasonable business need for the information for a planned or 
shipping product; (c) meeting reasonable and objective standards for 
the authenticity and viability of its business; and (d) having its 
programs

[[Page 59473]]

verified by a third party to ensure compliance with Microsoft 
specifications for use of the information.
    Subsection III.J.2., by its explicit terms, applies only to 
licenses for a small subset of the APIs and Communications Protocols 
that Microsoft will have to disclose, namely the specified types of 
security-related information. Except with respect to the small subset 
of information covered by this subsection, Microsoft's obligations to 
make disclosures of, or to license, APIs and Communications Protocols 
as otherwise required by the Proposed Final Judgment, including the 
requirements of Sections III.D. and III.E., are unaffected by this 
subsection. The requirements of this subsection cannot be used as a 
pretext for denying disclosure or licensing, but instead are limited to 
the narrowest scope of what is necessary and reasonable, and are 
focused on screening out only individuals or firms that should not have 
access to our use of the specified security-related information either 
because they have a history of engaging in unlawful conduct related to 
computer software (e.g., they have been found to have engaged in a 
series of willful violations of intellectual property rights or of one 
or more violations consisting of conduct such as counterfeiting), do 
not have any legitimate basis for needing the information, or are using 
the information in a way that threatens the proper operation and 
integrity of the systems and mechanisms to which they relate.
B. Section IV--Enforcement, Technical Committee and Internal Compliance 
Program
    Section IV of the Proposed Final Judgment establishes standards and 
procedures by which the settling Plaintiffs may obtain access to 
documents and information from Microsoft related to its compliance with 
the Final Judgment, and sets forth a procedure for enforcing the Final 
Judgment. Section IV also establishes a Technical Committee to 
facilitate evaluation of Microsoft's obligations and compliance, and 
mandates that Microsoft appoint an Internal Compliance Officer to 
administer and supervise Microsoft's compliance with the Final 
Judgment.
1. Enforcement Authority
    The United States and individual Plaintiff States each have 
authority to enforce the Proposed Final Judgment. Plaintiff States will 
coordinate their enforcement efforts through an enforcement committee, 
and in consultation with the United States. Enforcement by the United 
States or plaintiff States may include any legal actions or proceedings 
that may be appropriate to a particular situation, including petitions 
in criminal or civil contempt, petitions for injunctive relief to halt 
or prevent violations, motions for declaratory judgment to clarify or 
interpret particular provisions, and motions to modify the Final 
Judgment. While Microsoft will be given a reasonable opportunity to 
cure violations of Sections III.C., III.D., III.E. and III.H. of the 
Proposed Final Judgment prior to the filing of enforcement petitions, 
ex post abatement of violations will not be a defense to enforcement, 
through contempt actions or otherwise, of any knowing, willful or 
systematic violations by Microsoft or other persons specified in 
Section II of the Proposed Final Judgment.
    To facilitate monitoring of compliance with the Final Judgment, 
Microsoft must make available to Plaintiffs, upon request, records and 
documents in its possession, custody or control relating to matters 
contained in the Final Judgment. Microsoft must also make its personnel 
available for interviews regarding such matters. In addition, Microsoft 
must prepare written reports relating to the Final Judgment upon 
request.
2. Technical Committee
    The Proposed Final Judgment establishes a three-person Technical 
Committee (``TC'') to monitor Microsoft's compliance with its 
obligations under the Proposed Final Judgment, and to assist in 
enforcement and compliance. The TC does not, however, have independent 
enforcement authority. That authority remains with the United States 
and the Plaintiff States, just as it would if there were no TC to 
assist.
    TC members will be experts in software design and programming. The 
Proposed Final Judgment specifies the procedures for establishing the 
TC as well as its substantive powers. The TC may employ or retain such 
staff or consultants, including technical staff, as may be necessary to 
assist the TC in carrying out its duties.
    a. TC Establishment: One TC member each will be nominated by 
Plaintiffs and by Microsoft, and after the Plaintiff and Microsoft 
nominees are approved and appointed by the Court, those TC members will 
then nominate the third TC member for the Court's approval and 
appointment. Each TC member will serve for an initial 30-month term, 
after which the party that selected the TC member may either request 
that the Court reappoint the TC member, or may nominate a replacement. 
A TC member may be removed at any time if the United States in its sole 
discretion determines that the TC member has failed to act diligently 
and consistently with the purposes of the Proposed Final Judgment. In 
the event of a vacancy, the party who originally nominated that TC 
member will nominate a replacement for approval by the Court.
    After appointment by the Court, each TC member will enter into a 
Technical Committee services agreement with the United States. The TC 
services agreements will specify the rights, powers, and authority of 
each TC member, and will provide for compensation at Microsoft's 
expense and upon such terms and conditions as Plaintiffs approve. The 
TC services agreements will contain ancillary confidentiality and pre- 
and post-employment non-compete provisions necessary to prevent 
conflicts of interest that could prevent a TC member from performing 
his or her duties in a fair and unbiased manner. In addition to paying 
the TC members' fees and expenses as specified in the TC services 
agreement, Microsoft will indemnify and hold harmless the TC and TC 
members from any damages, losses, claims, liabilities or expenses 
arising from the TC's activities, except to the extent that such 
damages, losses, liabilities or expenses result from misfeasance, gross 
negligence, willful or wanton acts or bad faith. Microsoft will also 
provide the TC with permanent offices, telephones, and other support 
facilities at Microsoft's corporate campus in Redmond, Washington, and 
at other Microsoft facilities as requested by the TC.
    b. TC Duties: The TC will report to Plaintiffs, and will not be 
under the control or authority of Microsoft in any way. The TC will 
receive and investigate complaints or inquiries about Microsoft's 
compliance with the Proposed Final Judgment from third parties, 
Plaintiffs, or Microsoft's Compliance Officer. The TC has the power and 
authority to monitor Microsoft's compliance with the proposed Final 
Judgment, and will consult with Plaintiffs regarding its 
investigations. The TC will meet with Microsoft's Compliance Officer at 
least once during each investigation to allow Microsoft to respond to 
the substance of any complaints and to attempt to resolve them 
informally. This ``dispute resolution'' function reflects the 
recognition that the market will benefit from rapid, consensual 
resolution of issues, where possible. It complements, but does not 
supplant, Plaintiffs' other

[[Page 59474]]

methods of enforcement. If the TC concludes that a complaint is 
meritorious, the TC will so advise Plaintiffs and Microsoft and propose 
a remedy. The TC may also communicate with third parties who have made 
complaints or inquiries about how they or Microsoft might resolve such 
complaints or inquiries, provided that the TC complies with its 
confidentiality obligations as explained below. Thus, for example, the 
TC may explain to a third party various ways of implementing a right 
granted by the Proposed Final Judgment.
    The Plaintiffs and third parties may, but are not required to, 
submit complaints about Microsoft's compliance with the Proposed Final 
Judgment to the Compliance Officer. The Compliance Officer will devise 
a procedure acceptable to the Plaintiffs for submitting such 
complaints, and post the procedure on Microsoft's Internet website. Any 
complaint received by the Compliance Officer must be resolved or 
rejected within thirty days after receipt. The Compliance Officer will 
promptly advise the TC of the nature of the complaint and its 
disposition.
    Every six months during the term of the Proposed Final Judgment, 
the TC will prepare written reports summarizing its activities and 
Microsoft's business practices reviewed. Additionally, whenever the TC 
has reason to believe Microsoft may have failed to comply with the 
Proposed Final Judgment, the TC will immediately notify the Plaintiffs 
in writing and provide relevant details.
    The TC will have the power to obtain information from Microsoft in 
connection with its investigations and duties. The TC may require 
Microsoft, upon request, to make available records and documents in 
Microsoft's possession, custody or control, and to provide physical 
access to Microsoft facilities, systems and equipment. Microsoft must 
also make its personnel available to the TC for interviews. In 
addition, Microsoft must prepare written reports, data, and other 
information upon request. The TC will have access to all of Microsoft's 
computer software source code, subject to a confidentiality agreement 
whose terms are to be approved by Plaintiffs. The United States 
anticipates that the TC may also require Microsoft to submit for its 
use all ancillary documentation, tools, test suites, compilers or other 
materials used in conjunction with the source code to which Microsoft 
personnel have access. The TC may study, interrogate and interact with 
Microsoft's source code in connection with performing its duties.
    Information obtained from any source by the TC, any TC member, or 
any TC employee or consultant will remain confidential and will not be 
disclosed to any person other than the Plaintiffs, Microsoft or the 
Court. All such information, and any report or recommendations prepared 
by the TC, will be treated as Highly Confidential under the Protective 
Order in this case, except as may be otherwise specified by further 
order of the Court. The TC may preserve the anonymity of any third 
party complainant in its discretion or when requested to do so by that 
third party or by Plaintiffs.
    Finally, no work product, findings or recommendations of the TC may 
directly be admitted in any enforcement proceeding before the Court, 
and TC members may not testify or comment publicly regarding any matter 
related to the TC's activities or the Proposed Final Judgment. 
Plaintiffs, however, are not precluded from utilizing, relying on, or 
making derivative use of the TC's work product, findings or 
recommendations in connection with any activities relating to 
enforcement of this Proposed Final Judgment. For example, Plaintiffs 
may use information obtained from the TC as the basis for commencing a 
compliance inquiry or investigation.
3. Internal Compliance Program
    The Proposed Final Judgment requires Microsoft to maintain an 
antitrust compliance program to help ensure compliance with the 
Proposed Final Judgment. Microsoft must designate an internal 
Compliance Officer, who may be assisted by other Microsoft employees, 
with responsibility for administering Microsoft's antitrust compliance 
program and ensuring compliance with the Proposed Final Judgment. The 
Compliance Officer will be responsible for reviewing Microsoft's 
activities for compliance with the Proposed Final Judgment, and 
ensuring that Microsoft's internal notification and education 
responsibilities pursuant to the Proposed Final Judgment are carried 
out.
    Microsoft, through the Compliance Officer, must distribute a copy 
of the Proposed Final Judgment and additional informational materials 
to all of present and future officers and directors. Microsoft must 
also obtain from each person who receives the Proposed Final Judgment a 
certification that he or she has read the Proposed Final Judgment and 
agrees to abide by its terms, and has been advised and understands that 
he or she must comply with the Final Judgment and that failure to do so 
may result in conviction for contempt of court. The Proposed Final 
Judgment further requires Microsoft to maintain an internal mechanism 
whereby the recipients of the Proposed Final Judgment are briefed 
annually on the meaning and requirements of the Proposed Final Judgment 
and the United States' antitrust laws and advising them that 
Microsoft's legal advisors are available to confer with them regarding 
any question concerning compliance with either the Proposed Final 
Judgment or the United States antitrust laws.
C. Section V--Termination of the Decree
    Section V of the Proposed Final Judgment provides that, unless the 
Court grants an extension, the Final Judgment will expire five years 
after the date of entry by the Court. This time frame provides 
sufficient time for the conduct remedies contained in the Proposed 
Final Judgment to take effect in this evolving market and to restore 
competitive conditions to the greatest extent possible. Section V 
further provides that upon a finding by the Court that Microsoft has 
engaged in a pattern of willful and systematic violations, Plaintiffs 
may request a one-time extension of the Final Judgment of an additional 
two years, along with such other relief as the Court may deem 
appropriate. This provision is designed to supplement the government's 
traditional authority to bring contempt actions. By permitting 
Plaintiffs to seek a two-year extension upon a showing that Microsoft 
has engaged in a pattern of willful and systematic violations, this 
provision is designed to ensure that Microsoft will comply in good 
faith with the terms of the Final Judgment.

V. Alternatives to the Proposed Final Judgment

    The United States considered a number of alternatives to the 
Proposed Final Judgment. The United States is satisfied, however, that 
the requirements and prohibitions contained in the Proposed Final 
Judgment, supported by strong compliance and enforcement procedures, 
provide a prompt, certain and effective remedy for the violations 
Microsoft has committed.
    First, the United States considered litigation of the issue remedy 
in the District Court. The United States balanced the strength of the 
provisions obtained in the Proposed Final Judgment; the need for prompt 
relief in a case in which illegal conduct has long gone unremedied; the 
strength of the parties' respective positions in a remedies hearing and 
the uncertainties inherent in litigation; and the time and expense 
required for litigation of the

[[Page 59475]]

remedy. The United States determined that the Proposed Final Judgment, 
once implemented by the Court, will achieve the purposes of stopping 
Microsoft's unlawful conduct, preventing its recurrence, and restoring 
competitive conditions in the personal computer operating system 
market, while avoiding the time, expense and uncertainty of a litigated 
remedy. Given the substantial likelihood that Microsoft would avail 
itself of all opportunities for appellate review of any non-consensual 
judgment, the United States estimated that a litigated result would not 
become final for at least another two years. The remedies contained in 
the Proposed Final Judgment are not only consistent with the relief the 
United States might have obtained in litigation, but they have the 
advantages of immediacy and certainty.
    Second, the United States considered the remedies set forth in the 
Final Judgment entered by the District Court on June 7, 2000. That June 
2000 Final Judgment, which ultimately was vacated by the Court of 
Appeals, mandated the structural break-up of Microsoft into separate 
operating system and applications businesses and, during the pre-break-
up period, interim conduct requirements. After remand to the District 
Court, the United States informed the Court and Microsoft that it had 
decided, in light of the Court of Appeals opinion and the need to 
obtain prompt, certain and effective relief, that it would not further 
seek a break-up of Microsoft into two businesses. During the settlement 
discussions that resulted in the Proposed Final Judgment, the United 
States considered the interim conduct provisions in the June 2000 Final 
Judgment. The provisions in the Proposed Final Judgment are modeled 
after those earlier provisions, with modifications, additions and 
deletions that take into account the current and anticipated changes in 
the computer industry, as well as the decision of the Court of Appeals, 
which reversed certain of the District Court's liability findings.
    Finally, the United States received and carefully considered 
numerous remedy proposals, encompassing a broad range of relief, from 
industry participants and other interested individuals.
    Remedies proposed and considered included variations on the 
following:
     A requirement that Microsoft license the Windows source 
code to OEMs to enable them to modify, compile and distribute modified 
versions of the Windows Operating System for certain limited purposes, 
such as automatically launching Non-Microsoft Middleware, operating 
systems or applications; setting such non-Microsoft Middleware as the 
default; and facilitating interoperability between Non-Microsoft 
Middleware and the Windows Operating System.
     A requirement that Microsoft disclose the entire source 
code for the Windows Operating System and Microsoft Middleware, 
possibily within a secure facility for viewing and possibly without 
such a facility.
     A requirement that Microsoft must carry certain Non-
Microsoft Middleware, including but not limited to the Java Virtual 
Machine, in its distribution of the Windows Operating System.
     A requirement that Microsoft manufacture and distribute 
the Windows Operating System without any Microsoft Middleware or 
corresponding functionality included.
     A requirement that Microsoft continue to support fully 
industry standards if it chooses or claims to adopt them or extends or 
modifies their implementation.
     A requirement that Microsoft waive any rights to 
intellectual property in related APIs, communications interfaces and 
technical information if the Court finds that Microsoft exercised a 
claim of intellectual property rights to prevent, hinder, impair or 
inhibit middleware from interoperating with the operating system or 
other middleware.
    The United States carefully weighed the foregoing proposals, as 
well as others received or conceived, considering their potential to 
remedy the harms proven at trial and upheld by the Court of Appeals; 
their potential to impact the market beneficially or adversely; and the 
chances that they would be imposed promptly following a remedies 
hearing. The United States ultimately concluded that the requirements 
and prohibitions set forth in the Proposed Final Judgment provided the 
most effective and certain relief in the most timely manner.

VI. Remedies Available to Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages suffered, as well as costs and reasonable attorney's fees.

VII. Procedures Available for Modification of the Proposed Final 
Judgment

    The parties have stipulated that the Proposed Final Judgment may be 
entered by this Court after compliance with the provisions of the APPA, 
provided that the United States has not withdrawn its consent. The APPA 
conditions entry of the decree upon this Court's determination that the 
Proposed Final Judgment is in the public interest.
    As provided by sections 2(b) and (d) of the APPA, 15 U.S.C. 16(b) 
and (d), any person may submit to the Department written comments 
regarding the Proposed Final Judgment. Any person who wishes to comment 
should do so within sixty days of publication of this Competitive 
Impact Statement in the Federal Register.
    The Department will evaluate and respond to the comments. All 
comments will be given due consideration by the Department, which 
remains free to withdraw its consent to the Proposed Final Judgment at 
any time prior to entry. The comments and the responses of the 
Department will be filed with the Court and published in the Federal 
Register.
    Written comments should be submitted to: Renata Hesse, Trial 
Attorney, Antitrust Division, U.S. Department of Justice, 601 D Street, 
NW., Suite 1200, Washington, DC 20530, Facsimile: (202) 616-9937 or 
(202) 307-1454, Email: [email protected].
    While comments may also be sent by regular mail, in light of recent 
events affecting the delivery of all types of mail to the Department of 
Justice, including U.S. Postal Service and other commercial delivery 
services, and current uncertainties concerning when the timely delivery 
of this mail may resume, the Department strongly encourages, whenever 
possible, that comments be submitted via email or facsimile.
    The Proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any other necessary or appropriate for modification, 
interpretation, or enforcement of the Final Judgment. As previously set 
forth, the Proposed Finale Judgment would expire five years from the 
date of its entry.

VIII. Standard of Review Under the APPA for the Proposed Final Judgment

    The APPA requires that proposed final judgments in antitrust cases 
brought by the United States be subject to a 60-day comment period, 
after which the Court shall determine whether entry of the proposed 
final judgment ``is in the public interest.'' In making that 
determination

the court may consider:

[[Page 59476]]

    (1) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration or relief sought, anticipated effects of 
alternative remedies actually considered, and any other 
considerations bearing upon the adequacy of such judgment;
    (2) The impact of entry of such judgment upon the public 
generally and individuals alleging specific injury from the 
violations set forth in the complaint including consideration of the 
public benefit, if any, to be derived from a determination of the 
issues at trial.

15 U.S.C. 16(e) (emphasis added). As the Court of Appeals for the 
District of Columbia Circuit held, the APPA permits a court to 
consider, among other things, the relationship between the remedy 
secured and the specific allegations set forth in the government's 
complaint, whether the decree is sufficiently clear, whether 
enforcement mechanisms are sufficient, and whether the decree may 
positively harm third parties. United States v. Microsoft Corp., 56 
F.3d 1448, 1457-62 (D.C. Cir. 1995).
    In conducting this inquiry, ``the Court is nowhere compelled to go 
to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly settlement 
through the consent decree process.'' \3\ Rather,

[a]bsent a showing of corrupt failure of the government to discharge 
its duty, the Court, in making its public interest finding, should * 
* * carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.

United States v. Mid-America Dairymen, Inc., 1997 WL 4352 at *8, 1997-1 
Trade Cas. para.61,508, at 71,980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988), quoting United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert denied, 454 U.S. 1083 (1981); 
see also Microsoft Corp., 56 F.3d at 1458, Precedent requires that:

the balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.\4\

    The Proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it mandates 
certainty of free competition in the future. Court approval of a final 
judgment requires a standard more flexible and less strict than the 
standard required for a finding of liability. ``[A] proposed decree 
must be approved even if it falls short of the remedy the court would 
impose on its own, as long as it falls within the range of 
acceptability or is `within the reaches of public interest.' (citations 
omitted).'' United States v. American Tel. and Tel Co., 552 F. Supp. 
131, 151, (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 
U.S. 1001 (1983), qoting Gillette Co., 406 F. Supp. at 716; United 
States v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985).
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in the complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459. Because ``[t]he 
court's authority to review the decree depends entirely on the 
government's exercising its prosecurtorial discretion by bringing the 
case in the first place,'' it follows that the court ``is only 
authorized to review the decree itself,'' and not to ``effectively 
redraft the complaint'' to inquire into other matters that the United 
States might have but did not pursue. Id. at 1459-60. This is 
particularly true where, as here, the court's review of the decree is 
in-formed not merely by the allegations contained in the Complaint, but 
also by the extensive factual and legal record resulting from the 
district and appellate court proceedings.

IX. Determinative Material/Documents

    No materials and documents of the type described in the section 
2(b) of the APPA were considered in formulating the Proposed Final 
Judgment. Consequently, none are being filed with this Competitive 
Impact Statement.

    Dated: November 15, 2001.

    Respectfully submitted,

Phillip R. Malone,
Renata B. Hesse,
Paula L. Blizzard,
Jacqueline S. Kelley,
David Blake-Thomas,
Attorneys, U.S. Department of Justice, Antitrust Division, 901 
Pennsylvania Avenue, NW., Washington, DC 20530, (202) 514-8276.

[FR Doc. 01-29498 Filed 11-27-01; 8:45 am]
BILLING CODE 4410-11-M