Don't think that the U.S. Court of Appeals has let Microsoft off the hook. Yes, the Court of Appeals voided an order from a lower court that would have seen the software giant broken into two separate companies. Yes, it also rejected accusations that Microsoft had illegally linked its Internet Explorer browser to its Windows operating systems and tried to foster an illegal browser monopoly. However, many analysts say that these points are overshadowed by the unanimous ruling that Microsoft is indeed guilty of maintaining an illegal monopoly in the operating system market.

"You can hardly call this a victory for Microsoft," says Donald Falk, a partner with law firm Mayer, Brown, and Platt in Palo Alto, and an antitrust specialist. "It's as if they were let off on assault charges, but convicted for murder one." The case has been returned to the District Court, and though the Court of Appeals rejected the original "remedy" for the presumed Microsoft monopoly—that the company be split in two—an alternative remedy should be forthcoming.

All that Microsoft has gained is time. Even if proceedings continue apace, the District Court won't reach a decision before the late fall—if not the early spring. And if Microsoft chooses to petition the Supreme Court at any point along the way, a conclusion to the case is even further down the road. "Microsoft has found itself at least another year," says Falk.

The fact that the Appeals Court upheld the government's monopoly claim is particularly meaningful considering the reputations of the court's judges. Of the seven judges, four were appointed by Republican presidents Ronald Reagan or George H. W. Bush and three by Democrats Jimmy Carter or Bill Clinton. The overall conservative makeup of the court and statements made by several judges during oral arguments this February led many to believe that the odds were greatly in Microsoft's favor. Yet the court not only upheld the monopoly claim, it did so unanimously.

And in voiding the original remedy, the Appeals Court is in no way saying that Microsoft shouldn't be punished. The case has been returned to the District Court for further remedy proceedings largely because Judge Thomas Penfield Jackson, who originally oversaw the case at the District Court level, made mistakes last summer. "The remedy was thrown out not because it wasn't the right remedy," explains Falk. "It was thrown out because Judge Jackson made inappropriate comments to the press and did not conduct proceedings as he should have."

The two other government claims—that Microsoft illegally tied its browser to its operating system and tried to create an illegal browser monopoly—are of minor importance at this point. They could be revisited in the District Court and the government could petition to have them reviewed by the Supreme Court, but this isn't likely. The government's main objective is to get a remedy in place, and these two claims wouldn't have much impact on remedy proceedings. Says Falk, "The monopolization violation is in place, and that supports all the remedy they're after. There's very little extra bang on the remedy side that they would get from the other claims."

Besides, if the government petitions the Supreme Court, that would only delay the trial even more—which is the last thing they want. The longer this goes on, the larger Microsoft's presumed monopoly grows and the harder it is to prove that the older issues being discussed in the case are relevant to the current market. The government won't petition the Supreme Court unless Microsoft does so first. "In that case," says Falk, "the government could submit a conditional cross petition which is essentially says 'if you do grant Microsoft's petition, you should review these additional issues as well.'" But even this is unlikely. It too may complicate and delay matters.

Microsoft, of course, is happy for the case to be delayed, and a petition from its side wouldn't be surprising. The company has bought some time, but last week's Appeals Court ruling was unequivocal according to Falk: "It was a resounding win for the government," concludes Falk.