New Antitrust Battle Begins for Microsoft

WASHINGTON -- Pressing their landmark antitrust battle against Microsoft Corp., nine U.S. states Monday urged a federal judge to force the company to release the code for its Internet Explorer browser and include some rival software products with each copy of Windows.

On the first day of an unusual court proceeding to determine how to stop the software giant from violating federal antitrust laws, nine states and the District of Columbia said the company should face tougher remedies than have been proposed in a separate settlement reached by Microsoft and the U.S. Justice Department.

"Internet Explorer, your honor, is the fruit of Microsoft's statutory violations and it should be denied to them," said Brendan Sullivan, the lead attorney for the nine states that have refused to settle with Microsoft. Sullivan said forcing the company to bundle the competing Java programming language with Windows and reveal the blueprints for Internet Explorer, which dominates the web browser market after a bitter battle with rival Netscape, would level the playing field with other competitors.

But Microsoft lead trial lawyer Dan Webb denounced the states' proposal, saying it would force the company to offer more than 4,000 "mutant versions" of its flagship computer operating system.

"It will have a devastating effect on Microsoft," Webb said. "They're actually much worse than the structural remedy" of breaking Microsoft into two companies that the U.S. Justice Department and the states initially sought.

Webb added: "It would damage Microsoft's ability to innovate ... which is to the detriment of consumers."

The proceeding Monday, before U.S. District Judge Colleen Kollar-Kotelly, was held to outline the arguments and evidence that will be presented by both sides during a trial that is expected to last two months.

Both sides made opening statements and the first witness in the proceedings, Sun Microsystems Inc. executive Richard Green, was cross-examined by Microsoft lawyer Steve Holley.

Holley quizzed Green for nearly three hours about the intricacies of Sun's Java programming language, saying that licensing terms for Java were similar to Windows and suggesting that Microsoft should be free to develop its own substitute for Java.

The unusual proceedings come a week after Kollar-Kotelly heard the department and nine other states present a 21-page settlement accord that, among other things, prevents Microsoft from barring computer makers from installing some non-Microsoft products on Windows computers.

The accord also bars Microsoft from retaliating against personal computer makers for using non-Microsoft products and requires the software giant to reveal some technical details about Windows so software developers can make compatible products.

The dissenting states -- California, Iowa, Utah, Massachusetts, Connecticut, Kansas, Florida, Minnesota, West Virginia and the District of Columbia -- say the settlement does not protect consumers or restore competition for operating systems, where Microsoft's flagship Windows runs more than 90 percent of all personal computers.

To address the alleged shortcomings, the dissenting states want Microsoft to sell a "modular" version of Windows that would allow computer makers to select their own substitutes for so-called middleware products such as web browsers and media players.

They also want to force Microsoft to disclose more technical details to rival developers about the inner workings of Windows as well as details about Microsoft's key Internet commerce initiative, .Net, which critics fear could dominate the market for web services.

In a spirited defense with a flurry of charts and graphics displayed on screens in the courtroom, Webb asserted that the states' plan would result in the confiscation of billions of dollars worth of Microsoft's intellectual property and force the company to withdraw Windows from the market.

Kollar-Kotelly, who is overseeing both the settlement and the state trial phases of the penalty proceedings, must decide whether to impose tougher penalties or modify or finalize the settlement deal already on the table.

During Monday's trial she cautioned both sides that the goal of the proceedings "is to restore competition; punishment is not the goal under antitrust."

Microsoft said it plans to call its top Microsoft executives as witnesses. It is uncertain if Bill Gates will testify.