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Google wins legal faceoff with Microsoft over key government contract

January 5, 2011 | 11:28 am

Google Inc. won a major victory in a lawsuit against the U.S. Interior Department this week when a federal judge ordered the federal agency to hold off on a request for a bid to upgrade its e-mail system after Google argued that the process favored rival Microsoft Inc.

Susan Braden, a federal judge in Washington, issued a preliminary injunction that blocks the Interior Department from deciding to use Microsoft's e-mail and other software for its 88,000 employees. The order was unsealed Tuesday.

The contract, worth up to $59 million, is part of the federal government's migration to Web software. Google asked for the injuction, arguing that the bidding process was designed with Microsoft products in mind.

Braden ruled that Google had made a preliminary showing that the Interior Department violated rules covering competition in contracting and sent the matter back to the agency. Braden wrote that the injunction served the public interest and prevented "competitive harm" to Google. But she did not find any basis "to support Google's allegations of bad faith."

The Interior Department could appeal Braden's decision or modify the bidding process. A spokeswoman from the agency declined to comment on "ongoing litigation."

The ruling comes as Google and Microsoft compete to win business from federal, state and local governments in the lucrative arena of supplying online e-mail and other software. The Internet search giant is taking on Microsoft in the government market, which Microsoft has long dominated.

A Google spokesman said the company was pleased with the decision. Google filed the lawsuit in October.

In a statement, Microsoft said: "We believe the full record will demonstrate that this award is in the best interest of the government and taxpayers."

Jessica Guynn

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