States Seeking Stronger Restrictions Against Microsoft

The nine states still suing Microsoft Corp. for antitrust violations will ask a federal judge Friday to impose tougher enforcement procedures and stronger restrictions on the software giant than those contained in the Justice Department settlement, state attorneys general said Wednesday.

In particular, the states and the District of Columbia want the court to appoint a special master with authority to order Microsoft to act in certain ways, California Atty. Gen. Bill Lockyer said.

Under the Justice Department settlement, a committee of technical experts would report violations of the pact to law enforcement, which would in turn decide whether to file new legal motions and try to unearth evidence of improper behavior.

“We want a traditional court master to manage the agreement,” Lockyer said. “We don’t think the technical committee would do as well.”

The states’ proposal also will call for stronger rules in the same areas touched on in the Justice Department settlement, including protection of computer companies who choose to offer non-Microsoft programs along with the firm’s Windows operating system.

Technology company executives who saw a draft of the proposal Wednesday said it dramatically strengthened the Justice Department plan in several ways.

Most significantly, it would require Microsoft to sell a cheaper, stripped-down operating system without media players and other attached software, they said. Consumers who choose this option could spend the money they saved on competing programs.

“Under the DOJ’s proposal, if consumers choose to buy something else, they are still paying for the media player” included by Microsoft, said one executive who reviewed the states’ plan and came away impressed.

The states also would prevent Microsoft from nagging consumers to switch their default settings back to Microsoft products, which the company is allowed to do under the Justice Department settlement.

And it would require Microsoft to disclose technical details about how its operating system works with other software at the same time that it tells its own programmers that information. Under the Justice Department plan, the company could wait until just weeks before a new operating system is released to share that data.

Finally, there would be far fewer exceptions to the types of data Microsoft would have to disclose, the executives said.

“It actually requires Microsoft to change its conduct,” one said. “It allows the industry to innovate without fear of retaliation.”

The states considered going much further, with some attorneys general pushing to ask U.S. District Judge Colleen Kollar-Kotelly to break Microsoft into pieces.

The Justice Department and the states initially had sought that punishment and won it before a different federal judge.

But appeals judges threw out that verdict as insufficiently supported by the facts, assigned the case to Kollar-Kotelly, and set the stage for a milder punishment or settlement.

“I’m disappointed that we were not able to get enough of the states to go along with us on the break-up,” West Virginia Atty. Gen. Darrell McGraw Jr. said. “We were still pushing around on that this afternoon.”

Lockyer, who has emerged as a leader of the states that are pursuing the case, said that he had previously advocated a break-up. But holding the remains of the state coalition together took on more importance, so the group instead decided to model their plan on the Justice Department document.

After Microsoft responds to the states’ request, a hearing will be held in March on how the company should be punished.

The states declined to give more details on their filing, and some points still were being debated Wednesday.

For example, the attorneys were considering how to stop Microsoft from commingling the software code of Windows with its Internet Explorer Web browser.

In June, the appeals court ruled that Microsoft illegally linked the codes of the two products to prevent computer makers and consumers from deleting the browser.

The goal, the court said, was to bolster the Web browsers and quash competition.

The Justice Department settlement does not specifically address the commingling issue.

Microsoft Chief Executive Steve Ballmer said Wednesday that the company will continue to talk to the states that have refused to sign the settlement, but probably would not agree to accept any tougher restrictions.

“We still hope that some of the states over time will sign on,” Ballmer said.

Agreeing to additional conditions would undermine the “integrity” of the company’s existing settlement,” he said.