States seeking tougher penalties in Microsoft antitrust case

WASHINGTON -- A convicted monopolist getting off too easy or a company in danger of losing the innovation of its flagship Windows software if punished further?

That question is confronting a federal judge as a new phase of Microsoft's antitrust case begins Monday with both sides casting the stakes in dramatic terms.

Nine states that have rejected the government's recent settlement of the case with the software company will try to convince U.S. District Judge Colleen Kollar-Kotelly that tougher penalties are needed to protect consumers and competitors against future monopolistic practices.

One penalty would force Microsoft to release a version of Windows that would allow Microsoft features to be removed in favor of competitors' products.

Defense gears up

Microsoft plans to argue the additional penalties are not just Draconian, but also impossible to carry out.

"Third-party applications that rely on (the removed Windows software) will stop working as they're supposed to," said Brad Smith, Microsoft's incoming general counsel. "It's going to create new security vulnerabilities in the Windows product because as people move code they're going to create holes in the software."

"At the end of the day it wouldn't offer any benefits that would make those problems justifiable," Smith said.

In a court interview with state lawyers, Microsoft chief executive Steve Ballmer contended that the penalties would force Microsoft to remove Windows from store and lead to the company's demise.

The states reject that notion, which they call a doomsday defense. "That's just not true or even close to true," Iowa Attorney General Tom Miller said. "What it would do is perhaps introduce some competition to Windows. It isn't going to destroy Microsoft at all. It might make them compete."

The states also want to force Microsoft to release the software blueprints of its Internet Explorer Web browser, tell software developers how every piece of Windows interacts with software and business-level server computers, and comply with enforcement provisions that are stronger than those required by the federal government's settlement.

Even the first day of the trial may be contentious. Sun Microsystems executive Richard Green, the first witness to take the stand for the states, is scheduled to be cross-examined by Microsoft Monday.

Sun is worried that some sensitive company documents may be divulged by Microsoft lawyers during Green's time on the stand, and may ask Kollar-Kotelly to close the courtroom unless a deal can be worked out with Microsoft, a lawyer close to the states said.

Several of the state attorneys general suing Microsoft will also be in the courtroom, as a National Association of Attorneys General conference is scheduled this week. The attorneys general of Utah, Iowa, Massachusetts and Connecticut -- four of the most active in the case -- plan to be in the courtroom Monday.

The other members of the coalition are California, Kansas, Florida, Minnesota, West Virginia and the District of Columbia.

The proposed federal settlement would prevent Microsoft from retaliating against partners for using non-Microsoft products; require the company to disclose a limited number of its software blueprints so software developers can make compatible products; and make it easier for consumers to remove icons for extra Windows features.

That deal is not final until it is approved by Kollar-Kotelly, who is handling it as a separate proceeding from the state trial.

The states have to overcome several hurdles in order to win. Microsoft has already filed a motion to dismiss the states' claims, arguing that nine individual states do not have the authority to ask for penalties that would affect the entire nation.

In court papers filed Friday, more than 20 states defended the right of the still-fighting states to keep suing.

"Congress clearly intended the states (and private parties as well) to have concurrent authority, along with federal antitrust officials, to enforce federal law," lawyers for New York wrote the court.

Microsoft also wants to eliminate from the court's consideration any issues involving newer technologies such as handheld computers and set-top boxes.

In recent years, the company has put versions of its Windows operating system on those devices. Miller said those markets are relevant because they contain a "potential for competition."

Howard University law professor Andy Gavil said the judge will not want to settle on a remedy that is too backward-looking, but she would have to justify it legally.

"This is a very debatable issue, and she herself has raised some concern about venturing too far from the facts of the case," Gavil said.

------

On the Net: Microsoft: http://www.microsoft.com

National Association of Attorneys General: http://www.naag.org