States say Microsoft ruling puts restrictions on Windows
By Peter Spiegel in Des Moines, Iowa
Published: July 26 2001 19:21GMT | Last Updated: July 26 2001 21:35GMT
State law enforcement officials believe a recent federal court ruling prevents Microsoft from freely including new features into its Windows XP operating system.
This view could stalemate any settlement talks in the landmark antitrust suit and lead both sides back to court.
Tom Miller, attorney general for Iowa, who is spearheading the efforts by state governments in the case, said last month's unanimous appeal court decision places "significant restrictions" on Microsoft's ability to add new applications to Windows.
“[Bill] Gates and Microsoft said that the decision gave them the freedom to innovate," said Mr Miller in an interview with the Financial Times. "Freedom to innovate had always been code words for freedom to bundle, and that just wasn't true. It was flat out wrong...Their lifeline to bundle has been taken away from them."
Windows XP is due to be released at the end of October. The antitrust ruling's effect is quickly becoming a central issue in the three-year-old case, with Microsoft claiming only minor adjustments to the new operating system are required to meet the court's requirements.
But Mr Miller said prosecutors view the decision as much more wide-ranging, and hinted they may seek to prevent the company from including new add-ons, such as Media Player, which allows users to play videos on a desktop, and instant messaging, in Windows XP.
Microsoft is expected to use its new operating system to step up competition with AOL Time Warner's instant messaging system and RealNetwork's streaming video applications by including Microsoft's versions of those technologies in Windows XP.
Mr Miller likened the inclusion of those programmes to Microsoft's integration of its internet browser, Internet Explorer, with its operating system in Windows 98.
The appeals court found Microsoft abused its monopoly power when it commingled software code for Internet Explorer with Windows, and asked a lower court to review whether the company had violated other product-tying laws.
"Microsoft may be involved in very similar violations as before," Mr Miller said. "The Media Player and instant messaging may present platform potential much like the browser did." The Iowa attorney general said the state governments feel any benefit to consumers from including the new products in Windows XP are outweighed by the anti-competitive effects, since it prevents computer users from choosing a rival's product and may push competitors out of business.
"The consumer has no choice, and has the detriment of the lack of competition," Mr Miller said. "There's no real benefit, except for a small ease-of-use benefit. The real reason to do it is to destroy competition. That may well be Microsoft's business plan."
Although he would not say whether the Department of Justice - the lead litigator in the case - agrees with the states' analysis, Mr Miller said his relationship with Charles James, the Bush administration's new antitrust chief, "is off to a terrific start."
"I'm going to assume we end up in the same spot, like we did with the previous administration," he said.
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