IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

MICROSOFT CORPORATION’S PROPOSED
FINAL JUDGMENT

This cause having come to be heard, and this Court having fully considered the evidence and arguments, and having filed its Findings of Fact and its Conclusions of Law, it is hereby Ordered, Declared, Adjudged and Decreed:

1.Definitions. As used in this Decree:

a."Operating System" means the software that, inter alia, (i) controls the allocation and usage of hardware resources, such as scheduling the microprocessor time and allocating random access memory, (ii) provides a platform for the development of applications and other software products by exposing services to such products through various Application Programming Interfaces, and (iii) contains a user interface. Windows 98 is an example of an Operating System.

b."Windows Operating System" means the binary software code of Windows 95, Windows 98, Windows 2000 Professional and their successor Operating Systems, including the Operating System code-named "Millennium" that is currently under development.

c."Platform Software" means an Operating System or other software that exposes services to applications developers through Application Programming Interfaces.

d."Personal Computer" means a computer that is designed for use by one person at a time (as opposed to a server designed for use by more than one person at a time) that uses a video display and keyboard (whether or not the video display and keyboard are actually included) and that contains an Intel x86 or Intel x86-compatible microprocessor. Servers, television set-top boxes, hand-held computers, game consoles, telephones, pagers and personal digital assistants are examples of products that are not Personal Computers within the meaning of this definition.

e."Default Browser" means the Web browsing software that is configured to launch automatically (i.e., by "default") to display Web pages transmitted over the Internet or an intranet bearing the .htm extension when the end user has not invoked other Web browsing software for this purpose.

f."Original Equipment Manufacturer" or "OEM" means the manufacturer or assembler of a Personal Computer. OEM does not include a manufacturer of motherboards or other isolated components of a Personal Computer.

g."Independent Software Vendor" or "ISV" means the subsidiary, division or other operating unit of any software publisher not affiliated with Microsoft that is engaged in developing and marketing software products that call upon APIs exposed by Microsoft Platform Software.

h."Application Programming Interfaces" or "APIs" mean programming interfaces that are directly invoked by an application or middleware to obtain services from Platform Software.

i."Technical Information" means information regarding the identification and means to invoke APIs exposed by Microsoft Platform Software that is necessary to enable ISVs to design software products that will run on that Microsoft Platform Software, and does not include information about the underlying implementation of those APIs.

j."Intellectual Property Rights" mean copyrights, patents, trademarks and trade secrets.

k."License Agreement" means any intellectual property license pursuant to which Microsoft authorizes an OEM to preinstall any Windows Operating System on Personal Computers manufactured by such OEM.

2.Violations. Microsoft violated Section 2 of the Sherman Act, 15 U.S.C. § 2, by unlawfully maintaining a monopoly in the worldwide market for "Intel-compatible PC operating systems." Microsoft also violated Section 2 of the Sherman Act by attempting to monopolize the market for Web browsing software. Microsoft violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by unlawfully tying its Web browsing software to its Windows 95 and Windows 98 operating systems. Microsoft also violated the following state law provisions: Cal. Bus. & Prof. Code §§ 16720, 16726, 17200; Conn. Gen. Stat. §§ 35-26, 35-27, 35-29; D.C. Code §§ 28-4502, 28-4503; Fla. Stat. chs. 501.204(1), 542.18, 542.19; 740 Ill. Comp. Stat. ch. 10/3; Iowa Code §§ 553.4, 553.5; Kan. Stat. §§ 50-101 et seq.; Ky. Rev. Stat. §§ 367.170, 367.175; La. Rev. Stat. §§ 51:122, 51.123, 51:1405; Md. Com. Law II Code Ann. § 11-204; Mass. Gen. Laws ch. 93A, § 2; Mich. Comp. Laws §§ 445.772, 445.773; Minn. Stat. § 325D.52; N.M. Stat. §§ 57-1-1, 57-1-2; N.Y. Gen. Bus. Law § 340; N.C. Gen. Stat. §§ 75-1.1, 75-2.1; Ohio Rev. Code §§ 1331.01, 1331.02; Utah Code § 76-10-914; W. Va. Code §§ 47-18-3, 47-18-4; Wis. Stat. § 133.03(1)-(2).

3.Judgment. Judgment is entered for the United States on its second, third and fourth claims for relief in Civil Action No. 1232 and for the plaintiff states on their first, second, fourth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth, fifteenth, sixteenth, seventeenth, eighteenth, nineteenth, twentieth, twenty-first, twenty-second, twenty-fourth, twenty-fifth and twenty-sixth claims for relief in Civil Action No. 98-1233. The first claim for relief in Civil Action No. 98-1232 and the fifth claim for relief in Civil Action No. 98-1233 are dismissed with prejudice.

4.OEM License Agreements. Microsoft is enjoined from:

a.canceling or refusing to grant a License Agreement to any OEM because the OEM ships or promotes non-Microsoft Platform Software or exercises any of the options provided in paragraph 4.b of this Decree, provided that the OEM does not infringe Microsoft’s Intellectual Property Rights in exercising those options;

b.entering into any License Agreement or asserting any claim of right under copyright law that would prohibit any OEM from:

provided that nothing in paragraph 4.b shall be interpreted to limit Microsoft’s ability to develop, and license to OEMs, Operating Systems that invoke Web browsing functionality built into such products to display (a) information presented in the Operating System itself (e.g., Help files), (b) information presented in Web sites that enhance the functionality of the Operating System (e.g., Windows Update), or (c) Web pages transmitted over the Internet or an intranet that the content provider has developed in a manner that requires such Web browsing functionality for the content to be displayed properly or at all;

c.terminating the License Agreement of any of the 20 largest OEMs (as measured by annual volume of Windows Operating Systems that they ship) without having first given the OEM written notice of the reason for the proposed termination and not less than 30 days’ opportunity to cure.

5.Promotion on the Windows Operating System Desktop. Microsoft is enjoined from entering into a contract in which Microsoft agrees to promote any product or service of the other party to the contract on the Windows Operating System desktop, in a folder on the Windows Operating System desktop, in the Active Desktop or in the initial boot sequence of the Windows Operating System in exchange for the other party’s agreeing to limit the amount of any non-Microsoft Platform Software distributed by that party.

6.ISVs’ Access to Technical Information. Microsoft is enjoined from:

a.denying any bona fide ISV timely and complete access to such Technical Information as is provided through any software development program that Microsoft makes available to the software development community at large to assist in the creation of applications for Windows Operating Systems, subject to space limitations (in the case of events like design previews and professional developers conferences) and to the ISV’s complying with normal and customary terms (such as payment of applicable fees and observance of conditions protecting Microsoft’s Intellectual Property Rights); and

b.in the event that Microsoft furnishes Technical Information to an ISV in addition to that referred to in paragraph 6.a, conditioning the release of such Technical Information on the ISV’s agreeing not to write Platform Software, or applications for such Platform Software, that compete with any Microsoft software, provided that Microsoft may condition the release of Technical Information to an ISV on the ISV’s agreeing not to infringe any of Microsoft’s Intellectual Property Rights and agreeing to commercially reasonable measures (including reasonable confidentiality agreements) for protection of such rights.

7.Release of Products for Non-Microsoft Platform Software. Microsoft is enjoined from conditioning the timely release of a software product that is designed to run on non-Microsoft Platform Software and that is ready for commercial release on an agreement by the vendor of that Platform Software to limit the development, manufacture, distribution or promotion of Platform Software that competes with Platform Software offered by Microsoft.

8.Licensing of Predecessor Operating Systems. Microsoft shall, when it releases a major Windows Operating System such as Windows 95 or Windows 98, continue for three years to make the predecessor Windows Operating System available for licensing at a royalty no higher than the existing royalty to any OEM that desires such a license.

9.Effective Date. Microsoft shall begin to comply with the provisions of this Decree within 45 days of its entry, provided that Microsoft may seek a stay of this Decree pending any appeal of this Court’s judgment.

10.Monitoring of Compliance. To determine or secure compliance with this Decree, duly authorized representatives of the plaintiffs shall, upon written request of the Assistant Attorney General in charge of the Antitrust Division of the U.S. Department of Justice, on reasonable notice given to Microsoft at its principal office, subject to any lawful privilege, be permitted:

a.access during normal office hours to inspect and copy all books, ledgers, accounts, correspondence, memoranda and other documents and records in the possession, custody or control of Microsoft (which may have counsel present) relating to any matters contained in this Decree;

b.subject to the reasonable convenience of Microsoft and without restraint or interference from it, to interview officers, employees or agents of Microsoft (who may have counsel present) regarding any matters contained in this Decree; and

c.to require Microsoft to submit written reports, under oath if requested, regarding any matters contained in this Decree.

No information or documents obtained by the means provided in this paragraph shall be divulged by any of the plaintiffs except in the course of legal proceedings to which one or more of the plaintiffs is a party, or for the purpose of securing compliance with this Decree, or as otherwise required by law. Nor shall anything in this paragraph require Microsoft to waive any applicable privilege or immunity, including, without limitation, the attorney-client privilege and work product protection. If, when information or documents are furnished by it, Microsoft identifies in writing material to which a claim of privilege may be asserted under Rule 26(c)(7) of the Federal Rules of Civil Procedure and marks each page of such material "Subject to claim of protection under Rule 26(c)(7) of the Federal Rules of Civil Procedure," plaintiffs must give ten days’ notice to Microsoft prior to divulging such material in any legal proceeding (other than a grand jury proceeding) to which Microsoft is not a party.

11.Costs and Attorneys’ Fees. Microsoft shall pay the plaintiff states’ reasonable costs and attorneys’ fees.

12.Term. This Decree shall terminate four years from its effective date. Until termination, jurisdiction over this case is retained for the purpose of enabling any of the parties to apply to this Court at any time for such further orders and directions as may be appropriate for the correction, construction or carrying out of this Decree, for the earlier termination of the Decree, or to set aside the Decree and to conduct further proceedings if future developments justify that course in the appropriate enforcement of the Sherman Act.

___________________________
Thomas Penfield Jackson
U.S. District Judge

CERTIFICATE OF SERVICE

I hereby certify that on this 10th day of May, 2000, I caused a true and correct copy of the foregoing Microsoft Corporation’s Proposed Final Judgment to be served by facsimile and by overnight courier upon:

Phillip R. Malone, Esq.
Antitrust Division
U.S. Department of Justice
450 Golden Gate Avenue, Room 10-0101
San Francisco, California 94102
Fax: (415) 436-6687

Kevin J. O’Connor, Esq.
Office of the Attorney General of Wisconsin
P.O. Box 7857
123 West Washington Avenue
Madison, Wisconsin 53703-7957
Fax: (608) 267-2223

Christine Rosso, Esq.
Chief, Antitrust Bureau
Illinois Attorney General’s Office
100 West Randolph Street, 13th Floor
Chicago, Illinois 60601
Fax: (312) 814-2549

And by facsimile and by hand upon:

Richard L. Schwartz, Esq.
Deputy Chief, Antitrust Bureau
New York State Attorney General’s Office
120 Broadway, Suite 2601
New York, New York 10271
Fax: (212) 416-6015