States begin fight for tougher penalties against Microsoft

AP Technology WriterWASHINGTON (AP) -- Nine states seeking tougher antitrust penalties against Microsoft told a judge Monday the software giant should be forced to release the blueprints for its Internet browser in order to spark competition in a market it illegally dominated.

"Internet Explorer, your honor, is the fruit of Microsoft's statutory violations," said Brendan Sullivan, the lead attorney for the nine states that have refused to settle with Microsoft. "And it should be denied them."

Sullivan said forcing the company to give up its blueprints for Explorer, which now dominates the Web browser market after a bitter battle with rival Netscape, would provide "fertile ground for nascent competitors."

Dan Webb, a lawyer for Microsoft, reiterated the company's stance that the states' penalties would force the company to withdraw Windows from the marketplace and let competitors confiscate billions of dollars worth of Microsoft's intellectual property.

"It will have a devastating effect on Microsoft and a devastating effect on the (personal computer) ecosystem and consumers," Webb said.

"They're actually much worse than the structural remedy" first sought by the government that would have broken the company in two, Webb said.

Lawyers for both sides gave opening statements in the first week of a hearing to determine what penalties Microsoft should face in the historic antitrust case that found the software giant operated as an illegal monopoly.

U.S. District Judge Colleen Kollar-Kotelly must decide whether to impose tougher penalties than those the federal government imposed in a settlement with the company last fall.

Microsoft plans to argue the penalties proposed by the nine states -- which include forcing Microsoft to release a "modular" version of Windows in which Microsoft features can be removed in favor of alternatives from competitors -- are not just Draconian, but impossible to carry out.

Microsoft estimates that the penalty would create over 4,000 "mutant" versions of Windows that the company would have to test to make sure they work properly, Webb said. The company put almost five million man-hours of testing into its latest Windows XP operating system, he said.

"At the end of the day, the product would have very little value," Webb said.

The company plans to call top Microsoft executives, including chairman Bill Gates and chief executive Steve Ballmer, as witnesses. "Of course, I'd rather call (baseball star) Cal Ripken or the skaters from Canada who won a gold medal but they don't know anything about this," he said.

The proceedings are expected to last two months.

The nine states refused to join a settlement that the government and several states reached with Microsoft in November.

They plan to call some of Microsoft's fiercest rivals as witnesses to help make their case that harsher penalties are necessary to protect consumers and competitors from Microsoft in the future.

The states said Microsoft's anti-competitive conduct continues even now and showed internal Microsoft documents about its efforts to stop Linux, the free operating system that competes with Microsoft.

Dell Computer, one of the nation's largest PC makers, had plans to put Linux on some of its computers in 2000 but abandoned those plans after Microsoft put pressure on the company, the states' lawyers said.

The states showed plans for a meeting between Ballmer and Dell executives in which Microsoft would give Dell "a reminder of the meat behind why its smart to be partnered with" Microsoft, the document stated.

"Its untenable for our 'Premier Partner' on Windows 2000 to be doing aggressive market development for another operating system," it said.

By June 2001, Dell laid off its head Linux employee and reassigned the rest of his team. Lawyers for the states said Microsoft pursued a similar course with Compaq when that company flirted with Linux in 1999.

The nine that have continued to pursue the antitrust cases against Microsoft are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and 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.

The deal is not final until it is approved by Kollar-Kotelly, who is handling the settlement and the state trial as separate proceedings.

------On the Net:

Microsoft: http://www.microsoft.com

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