Microsoft reckons the bill for a decade of anti-trust litigation

By Alun Williams

Posted on 8 Nov 2004 at 17:04

Microsoft claims today's settlement with Novell marks a significant milestone: not only does it claim to have settled with major competitors in the anti-trust cases, it is also now in a position to estimate its exposure to remaining claims. And furthermore, Real Networks is now the only competitor continuing the fight in Europe, at the Court of First Instance in Luxembourg.

Speaking about the Novell settlement, Brad Smith, Microsoft's senior vice president and general counsel, reckoned up the total of Microsoft's legal bill: a settlement with AOL and Time Warner in May 2003 cost $750mn, the April 2004 settlement with Sun Microsoft cost $700mn (specifically, the anti-trust element) and the Novell settlement cost $536mn. Furthermore, $1bn was previously reserved to cover all the class-actions brought by US states. This brings the total to $3bn.

If you add in the $900mn that was also paid to Sun to settle the payment disputes and the $350mn paid for advanced royalties, the total becomes $4.2bn.

And finally, now the company believes it can estimate its 'exposure' in the remaining anti-trust cases as $950mn, the grand total for Microsoft's years of legal dispute can be reckoned as $5.1bn. To put that in perspective, the software giant's recent financial results - Microsoft reports server-driven record revenues - reported revenues of $9.19bn, producing a net income of $2.9bn for the last three months alone.

'Putting the two things together [Microsoft has also patched fences with the CCIA (Computer & Communications Industry Association)], these agreements represent another substantial milestone of Microsoft resolving the disputes that have divided our industry for a decade,' said Smith.

'We believe this sends a strong message that we are now able to sit down, face to face, to resolve the issues that were left to governments and courts to settle,' he added. 'It creates a foundation for us to work in a stronger manner to address the problems of the future.'

Specifically, when Smith was pressed on how Microsoft would now work with the CCIA, he identified general areas such as improving support for R&D, ensuring better support for data security and privacy and broadening access to the Internet across the world. He also mentioned the need to persuade the government to allow immigration policies that would allow companies like Microsoft to continue their practice of 'recruiting the best people from around the world'.

When asked about the impact of the recent settlements on the outstanding European litigation, Smith said they 'couldn't hurt'.

'Increasingly the strong majority of competitors are saying "our issues have been resolved,"' he maintained. 'This should be taken into consideration.'

As for the prospects of settling with Real Networks, Smith commented: 'We are prepared to meet anyone half-way to see if we can resolve our differences.'