Judge to hear Microsoft sanctions sought by states

Peter Kaplan

WASHINGTON: Nine states opposed to a proposed settlement of the antitrust
case against Microsoft Corp. go to court on Monday seeking to persuade a judge
that tougher sanctions are needed to ensure the world's largest software company
doesn't crush competition.

In hearings expected to last eight weeks, Microsoft will portray the states'
demands as excessive and try to confine remedies to specific antitrust
violations found at trial.

The hearings promise to be a pivotal battle over whether the remedies in the
case to be decided by US District Judge Colleen Kollar-Kotelly should be
narrowly focused or anticipate new areas where Microsoft can flex its monopoly
power.

In a separate proceeding, the judge still is considering whether the
settlement negotiated with the Justice Department in November, and agreed to by
nine other states, is in the public interest. In June, a federal appeals court
threw out some of the charges against Microsoft, but upheld a lower court ruling
that the company had illegally maintained its Windows software monopoly in
personal computer operating systems.

The appellate judges agreed Microsoft tried to crush rival Netscape
Communications after the company concluded Netscape's Navigator Internet browser
was a threat to Windows' dominance. When the government first brought its
landmark antitrust case against Microsoft nearly four years ago, few computer
users had ever heard of media players, instant messaging or interactive
television set-top boxes.

States want sufficient remedy

These products will now be featured in court by the states that have refused
to settle. "The states are trying to say that the market keeps moving on,
and if you don't address these new emerging technologies, the remedy is not
going to be sufficient," said Andrew Gavil, a professor of antitrust law at
Howard University.

The proposed settlement is designed to remedy the antitrust violations by
giving computer makers more freedom to feature rival software on their products,
among other things. Microsoft will parade company executives, economists and
legal experts to argue the sanctions can't go beyond those specific wrongdoings
cited by the appeals court.

"The non-settling states are not entitled to broader relief designed to
terminate what was found to be Microsoft's monopoly," the company said in
its pretrial brief.

But attorneys representing the nine dissenting states -- California,
Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah, West
Virginia, plus the District of Columbia -- will tell the judge that's not
enough.

The states have exhorted the judge to "go beyond the specific, past
statutory violations" found by the courts, arguing the case "has been
a futile exercise if the government proves a violation but fails to secure a
remedy adequate to address it."

The states will call witnesses from companies from related industries, from
telecommunications giant SBC Communications Inc. and hand held computer maker
Palm Inc. to interactive television software maker Liberate Technologies Inc.

To ensure a competitive market for future software, the states are proposing
that Microsoft sell a "modular" version of Windows that would allow
computer makers to strip out add-on features like the Internet browser or the
media player.

They also would force Microsoft to disclose more about its software and
license its Internet Explorer browser to other companies royalty-free.

But Kollar-Kotelly has already expressed skepticism about the breadth of the
states' argument, and has been receptive to Microsoft's contention that devices
like hand held computers and media players should be excluded.