Table: Dissecting the Microsoft Deal

Critics say the Justice Dept.'s settlement proposal with Microsoft is riddled with loopholes and weaker than the deal the government sought last year--before a federal appeals court unanimously upheld the core charges against Microsoft. Here's a look at the proposal:

PROBLEM SETTLEMENT PROPOSAL POTENTIAL LOOPHOLES

DISCOUNTING The deal says Windows Microsoft can still favor Microsoft rewards PC shall be sold with friendly computer manu- makers that favor its "uniform licensing facturers with lower products by giving agreements...terms prices on its other soft- them a better price and conditions." ware, such as the Office on Windows. productivity suite, crit- ics say. They also are worried that it may also have room to enter sweet- heart joint ventures with PC makers.

INTEROPERABILITY It requires Microsoft The API disclosures have Microsoft fails to to disclose more info to be made to manufac- give other companies about the so-called turers of "middleware," the technical data APIs--the application a vaguely defined category they need to make programming interfaces of software that includes their software run --that allow other Web browsers and media well with Microsoft's types of software to players. Microsoft has no products. run on Windows. obligation to help manu- facturers of handheld devices.

BUNDLING PC makers have the Financially strapped PC Microsoft wraps new freedom to ship makers have little incen- products into Windows, machines with non- tive to change the so it's hard for rivals Microsoft middleware software that Microsoft to distribute software. and to hide icons offers with Windows. that activate Micro- They would have to buy soft's products. rival middleware at their own expense, increasing support and R&D expenses.

PROBLEM EARLIER PROPOSAL

DISCOUNTING During last year's mediation, Microsoft rewards PC Justice tried to put restric- makers that favor its tions on joint ventures with products by giving PC makers and gave Microsoft them a better price less wiggle room for volume on Windows. discounts and marketing sub- sidies. But other software products, such as Office, weren't covered.

INTEROPERABILITY Trustbusters tried to make Microsoft fails to Microsoft give up API infor- give other companies mation for manufacturers of the technical data handheld devices. They also they need to make supplied tougher legal stan- their software run dards for the speed and com- well with Microsoft's pleteness of the disclosure. products.

BUNDLING Justice tried to force Micro- Microsoft wraps new soft to sell versions of Windows products into Windows, without some middleware in it, so it's hard for rivals such as Web browsers. PC makers to distribute software. would have received a price break for stripped-down versions of Windows.

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