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Monday, 18 March, 2002, 23:35 GMT
Microsoft defends anti-trust deal
Microsoft case graphic
Legal arguments have opened between lawyers for the US nine states pressing for tougher penalties in the anti-trust case against software giant Microsoft and the company's attorneys.

Microsoft's lawyer said the solutions demanded by the nine states would be "devastating" for the company.

Microsoft founder Bill Gates is set to appear as a witness during the antitrust case. Lawyers acting for Microsoft said he was one of the 25-30 witnesses the company would call upon during the hearing, which is expected to last for five weeks.

The nine states have rejected the penalties already laid out in an out-of-court settlement between Microsoft and the Department of Justice and several other states as inadequate.

In his opening statement, the leading lawyer for the nine states urged the judge to ensure the eventual settlement would "create fertile ground for competition".

Lawyer Brendan Sullivan said the nine states did not "seek the destruction of Microsoft" but they were "seeking to punish Microsoft" for abusing its market position.

'Impossible' and 'devastating'

In response, Microsoft lawyer Dan Webb said the measures proposed by the states would be "devastating" for the software developer.

The states want Microsoft to alter its Windows operating system - which sits on the desktops of most of the world's PC's - to create a modular version that would allow other software firms to add on their products.

But Microsoft's lawyer said the suggestion would be "impossible" to implement. "It cannot from an engineering standpoint be done".


The states are trying to say that the market keeps moving on, and if you don't address these new emerging technologies, the remedy is not going to be sufficient

Andrew Gavil, professor of antitrust law, Howard University

Disclosure of technical information to allow other software firms to make their products compatible with Windows would also destroy the value of Microsoft's flagship software, he said.

"If Windows is cloned (by competitors), then the value of Windows to Microsoft is zero", he said.

Microsoft's chief executive, Steve Ballmer, who is also likely to be called as a witness, has already objected in pre-trial testimony that the security of Windows would be jeopardised.

"I actually think we would need to withdraw Windows from the marketplace", he has said.

How wide to go?

At the heart of the argument was whether the settlement should take pre-emptive action to restrain Microsoft's potential domination of new technologies, as the nine states want it to, or merely redress for the company's past misdeeds.

Microsoft's lawyers argued the states' demands were excessive, saying the so-called remedies ought to be confined to issues on which Microsoft has been found to be at fault.

"It's pretty clear the states view this as a second liability trial", said Mr Webb.

For the nine states, Mr Sullivan said there was a "remarkable similarity" between Microsoft's past conduct and "the conduct being employed today and what will be available to Microsoft in the future".

Critical

"It really is a very critical argument," said Andrew Gavil, professor of antitrust law at Howard University in Washington.

Dissenting states
California
Connecticut
Florida
Iowa
Kansas
Massachusetts
Minnesota
Utah
West Virginia
District of Columbia

"The states are trying to say that the market keeps moving on, and if you don't address these new emerging technologies, the remedy is not going to be sufficient."

Lawyers following the case say the main point of contention was likely to be how many products are implicated in an appeals court ruling that Microsoft illegally maintained its Windows software monopoly in personal computing systems.

Among their conclusions, the judges agreed that Microsoft attempted to crush Netscape Communications, a rival which offered its own internet browser.

"Microsoft will argue that this case was always about the browser and little or nothing more, but the appellate court's language is vague and arguably all-encompassing," said Hillard Sterling, anti-trust attorney at Gordon & Glickson in Chicago.

The judge who is hearing the arguments is district court judge Colleen Kollar-Kotelly.

She is also considering whether the out-of-court settlement would be in the public interest.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Brian Milligan
"Microsoft's four hundred lawyers are guaranteed a job for years to come"
The BBC's Tim Bowler
"If called to give evidence, it'll be the first time Bill Gates will have appeared in court in person"

The settlement

Appeal court ruling

Appeal hearing

Analysis
See also:

12 Mar 02 | Business
08 Mar 02 | Business
07 Mar 02 | Business
06 Mar 02 | Business
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