U.S. Argues Microsoft Was Evasive

WASHINGTON -- The U.S. government argued Tuesday in the landmark Microsoft Corp. antitrust case that the firm attempted to "evade" a finding that it holds monopoly power and that it exercised that power illegally.

The written argument by the Justice Department and 19 states was a relatively short 30-page reply to Microsoft's filing earlier this month in the case. It helps set the stage for oral arguments Feb. 22 to determine whether Microsoft violated the law.

Microsoft argued earlier this month that its actions have been lawful and that it lacked monopoly power, because it faces competition and is unable to raise itsprices unilaterally.

In its filing, the software giant repeatedly disagreed with the findings of fact reached by U.S. District Court Judge Thomas Penfield Jackson last year that concluded Microsoft's dominance in personal computer operating systems had harmed consumers, competitors and computer makers.

Jackson will decide whether Microsoft's actions violated the nation's antitrust laws. If he finds they do, he will determine a remedy.

The government said Microsoft's argument "improperly evades the substantive importance of the finding of monopoly power."

The government said Microsoft, "fails to identify any basis for denying the plain legal consequence of [Jackson's] findings that Microsoft unlawfully maintained a monopoly" in violation of the Sherman Antitrust Act.

Replying to Microsoft's argument that it faces competition, the government said the firm identifies the very firms that Jackson "carefully examined and found not be in the same market under well-established standards."

Microsoft said it faced "serious competitive threats" from Apple, workstations running the Unix operating system and will in the next few years face competition from "information appliances."

"The court found that none of these 'threats' was a meaningful substitute for Intel-based PC operating systems," the government said.

Microsoft spokesman Mark Murray said that "the government is misreading the law, and misrepresenting the facts of our industry, which is intensely competitive and getting more competitive every day with events like the AOL-Time Warner merger and massive new support for the Linux operating system."

America Online Inc. announced early this month its intention to acquire Time Warner Inc.

Linux is a version of the UNIX operating system.

The company also said it "cannot control prices or exclude competition for a substantial period of time," two other tests of monopoly power.

The government noted Judge Jackson found Microsoft had held an operating system monopoly for personal computers "over at least a decade."

"Any requirement of durability is undoubtedly satisfied here," it said.

The government also argued Microsoft held power over price, again citing Jackson's findings of fact. The government said Jackson found Microsoft had an evident "lack of concern over rivals' prices" and that, internally, it recognized it had a "vast range of discretion over price."

The government said Microsoft used that power to unlawfully attempt to monopolize the market for browsers to peruse the World Wide Web, as well as committing other illegal acts.

Microsoft on Feb. 1 will have one more opportunity to reply in writing to the government.

Both sides in the case have been meeting with a Chicago judge appointed by Jackson as a mediator. However, few signs of a settlement are emerging.