Microsoft Rejects Compromise in Antitrust Case
Wed Jun 19, 7:15 PM ET
By Peter Kaplan
WASHINGTON (Reuters) - Microsoft refused on
Wednesday to offer further concessions to end its
antitrust case, rebuffing a federal judge's invitation to
revisit the demands of nine states seeking stiffer
sanctions against the software giant.
The state's proposed sanctions
were "fundamentally flawed,"
Microsoft attorney John Warden
told U.S. District Judge Colleen
Kollar-Kotelly during closing
arguments.
"We can't remedy this by changing
a few words here and there,"
Warden said. "We can't fix it."
The nine states, in contrast, heeded the judge's
instructions and identified their most important
demand -- a requirement for Microsoft to share
computer code that allows rival software to work well
with Microsoft's dominant Windows operating system.
The states accused the company of "thuggish"
business practices in their closing presentation, and
portrayed the judge as the last chance to stop
Microsoft's bullying.
"I suggest to you that Microsoft still doesn't get it and
you're the only one left to tell them what it's all
about," states' attorney Brendan Sullivan told
Kollar-Kotelly.
The nine states have refused to sign a settlement of
the case reached in November between Microsoft and
the U.S. Justice Department ( news - web sites) and
endorsed by nine other states previously party to the
four-year-old case.
JUDGE QUERIES BOTH SIDES
Kollar-Kotelly issued an order on Tuesday telling both
sides to come to court prepared to answer questions
on how their proposals could be modified if she rejects
their respective remedies as currently written --
suggesting she is open to some hybrid of the two
positions in a modified settlement agreement.
The judge's request "suggests that she's trying to
understand what's most important to the parties and
what causes the least amount of pain," said Mark
Schechter, an antitrust attorney with the firm Howrey
Simon Arnold & White.
"I think it's reasonably likely that the court will order
some additional conduct restrictions" that go beyond
the Justice Department settlement, Schechter said.
Outside the courthouse afterwards, the hold-out
attorneys general said they were not surprised by
Microsoft's decision to reject any further compromise.
"I think it's a gamble that the judge may not mean
what she said and is going to go with what they want,"
said Connecticut Attorney General Richard
Blumenthal.
The states said the sharing of key Windows computer
code was even more important than demands for a
version of Windows with removable features that could
be replaced by competitors' software.
Microsoft would be forced to behave "more like a
company facing competition and less like a firm
existing in a comfortable monopoly" under the
dissenting states' proposals said Steve Kuney, another
attorney for the states.
Kuney accused Microsoft chairman Bill Gates ( news -
web sites) of arrogance and advocating monopoly when
he testified in April.
"Somehow they know better than anyone else what's
best for this PC ecosystem. What's good for Microsoft
is therefore good for the economy, good for consumers
and good for everybody else," he said.
MICROSOFT TAKES EXCEPTION
Warden, for Microsoft, accused Kuney of
misrepresenting the company's position. "Microsoft
does not claim that monopoly is the preferred form of
industrial organization," he told Kollar-Kotelly.
Warden also took exception to Sullivan's portrayal of
Microsoft as some kind of scofflaw. "We haven't failed
to get some message. We haven't claimed that we're
immune from the law or anything of that kind," he
said.
Microsoft argued that the states demands go way
beyond addressing the antitrust violations it actually
committed and would harm consumers and the entire
computer industry.
Warden said U.S. Supreme Court ( news - web sites)
precedents for sweeping antitrust remedies, cited by
Kuney for the states, were not applicable to the
Microsoft case.
Last June, a federal appeals court upheld trial court
findings that Microsoft illegally maintained its
Windows monopoly in personal computer operating
systems by acts that included commingling Web
browser code with Windows to fend off Netscape's rival
browser.
The appellate judges rejected breaking the company
in two to prevent future antitrust violations, but sent
the case to a new judge, Kollar-Kotelly, to consider
the best remedy.
Microsoft has argued that the restrictions being
sought by the states would benefit rivals like AOL
Time Warner Inc. and Sun Microsystems Inc. , and
would deprive consumers of a reliable platform for
software.
Under the Justice Department settlement, Microsoft would be required to let
computer makers hide desktop icons for some features of its Windows
operating system to allow the promotion of competing software by computer
makers.
The hold-out states say stricter sanctions are needed to protect new
technologies such as Internet services and handheld computers from any
anti-competitive tactics.
The nine states still pursuing the case are California, Connecticut, Florida,
Iowa, Kansas, Massachusetts, Minnesota, Utah, West Virginia, plus the
District of Columbia.
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