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Justice backs states' attempt to curb Microsoft's practices
By TIMES WIRE WASHINGTON -- The Justice Department, a partner to Microsoft Corp. in settling their antitrust dispute, hesitantly provided some support Monday for nine states seeking additional, stricter curbs on the company's business activities. The Justice Department told the judge considering the states' proposals there was no legal support for Microsoft's argument that the states lacked authority to seek remedies now that the U.S. government has agreed to settle the 4-year-old case. Still, the department advised U.S. District Judge Colleen Kollar-Kotelly that it "recognizes the danger" that the states' proposal "may harm consumers, retard competition, chill innovation or confound compliance" with the settlement it negotiated last year with Microsoft. Moreover, echoing Microsoft's argument throughout the ongoing state remedies trial, the department said the states are trying to push their case into "new products, new services, new markets, and even new theories of liability." It said it doubted whether "a small group of states" were the ones to seek such broad remedies. Kollar-Kotelly, who is also reviewing the settlement, should "require a clear demonstration that any relief sought is necessary to protect competition for the benefit of the public, not crafted for the private benefit of any individual competitor," Charles James, the Justice Department's antitrust chief, said in the brief. Microsoft immediately interpreted the brief favorably, saying it was gratified that the department "has weighed into support major elements" of the challenge to the states' case. Microsoft has accused the states of seeking remedies to help competitors such as Sun Microsystems Inc. and AOL Time Warner Inc. The remedy hearings, now in their fifth week, were ordered by an appeals court that last year upheld findings that Microsoft illegally defended its Window monopoly for personal computer operating software. Until Monday, the Justice Department had avoided getting involved in any way in the states' case. It did so Monday only because it had been invited to do so by the trial judge. The dismissal of that case would probably end any chance that the software company would face sweeping requirements for change in the way it designs and markets its software. The more limited restrictions under the Justice-Microsoft settlement deal would be the only curbs on Microsoft. The states rested their case after Microsoft lawyer Michael Lacovara questioned their final witness, economist Carl Shapiro. Under questioning by Lacovara, Shapiro, an expert for the states seeking tough antitrust remedies against the company, said that forcing the company to disclose the code of its Internet Explorer browser risks creating incompatible software. While Shapiro supports forcing Microsoft to place the code of Internet Explorer in the public domain, the University of California professor said there was a risk that development of competing versions of the Web browser would create software that wouldn't work with other computer or Internet programs. If the court concludes the risk that different versions of Internet Explorer won't work with other programs is too great, it could allow Microsoft to keep secret the code of subsequent versions of its Web browser, Shapiro said. Today, Microsoft will call its first witness, Advanced Micro Devices Inc. chairman W.J. Sanders III, to testify that the states' proposals will lead to fragmentation of industry standards. AMD is the No. 2 manufacturer of microprocessors that power PCs that run Windows. The nine states, led by California and Iowa, are also challenging a proposed settlement between the Bush administration and the world's largest software company to end the 4-year-old antitrust case. The other states challenging the settlement are Connecticut, Florida, Kansas, Massachusetts, Minnesota, Utah and West Virginia. The District of Columbia is also supporting tougher remedies against Microsoft. The judge is treating the states' demand for extra restrictions as a matter separate from the Justice-Microsoft settlement deal. Before that deal can go into effect, she must approve it; the test is whether she will find it to be "in the public interest." Even if Kollar-Kotelly approves the settlement, she does not necessarily have to reject the remedies the states want, which include placing much of Microsoft's secret software code within reach of its competitors, enabling them to design non-Microsoft functions that would work on the Windows operating system. -- Information from Bloomberg News and the Boston Globe was used in this report.
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From the Times Business report
From the AP
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