WASHINGTON - The 18 states involved in the landmark Microsoft antitrust case reached a split decision Tuesday as nine accepted the settlement between the software giant and the Justice Department, and the others vowed to press on for tougher sanctions.
"Every judge who has heard the case agrees that Microsoft engaged in illegal business practices," California Attorney General Bill Lockyer said. "While the settlement proposals are a step forward, they fail to provide adequate remedies for Microsoft's illegal use of its monopoly power to crush innovative technology."
After negotiating intensively throughout the night before a 9 a.m. deadline, the states asked U.S. District Judge Colleen Kollar-Kotelly for a few more hours on Tuesday to examine the settlement. They returned to court in the afternoon and reported their decisions.
Nine states - New York, Illinois, North Carolina, Kentucky, Michigan, Ohio, Wisconsin, Louisiana and Maryland - said they were signing on after winning what they characterized as some additional concessions to the original settlement, although Assistant Attorney General Charles James said any changes were merely clarifications.
The rest of the group - California, Connecticut, the District of Columbia, Florida, Iowa, Kansas, Minnesota, Massachusetts, Utah and West Virginia - did not sign on, with statements from those state prosecutors ranging from outright rejection to mild dissatisfaction.
"This is a bad deal. It's a bad deal for consumers, it's a bad deal for competition and in the end it will be a very bad deal for the economy of this country," Massachusetts Attorney General Tom Reilly said.
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"Iowa cannot join in the settlement," Attorney General Tom Miller said, although he did not rule out the possibility of settling in the future. "We have worked on this case for years and spent countless hours in painstaking negotiation," he said. "We will live with any settlement for years, so I will spend several more days reviewing it."
Microsoft's attorney, however, said the company was finished with negotiating.
"Microsoft believes the settlement process has come to an end," attorney John Warden told the judge. "The issues in this case have been beaten to death, and they have been beaten to death by people who are worn out."
The settlement announced Friday would require Redmond, Wash.-based Microsoft to provide competitors with information that would help them make rival products compatible with the dominant Windows operating system. It would also give computer makers more flexibility to replace Windows features with competing products, and would require Microsoft to open up its financial records and strategic plans to independent monitors.
Some state attorneys general said the agreement could serve as a baseline, but said they intended to seek improvements in areas dealing with middleware competition, protections for computer manufacturers and server interoperability.
The case now proceeds on two tracks. The first track is a 90-day review process under the Tunney Act, a 1974 law that requires a federal judge to determine whether government antitrust settlements are in the public interest.
The second track is a schedule already set by Kollar-Kotelly to decide an appropriate remedy for Microsoft's antitrust violations. Those remedy hearings are scheduled to begin March 11.
If the judge approves the settlement after the Tunney Act review process, all states gain the benefits of its provisions, even if they are pursuing additional remedies in court. Microsoft and the Justice Department have said they will implement the settlement in mid-December, regardless of the legal situation.
Microsoft Chairperson Bill Gates called the decision by nine states to sign on to the deal "a very significant, positive step toward resolving these issues once and for all.
"We made every effort to reach a compromise to address the states' concerns and allow everyone to move forward," he said. "Yesterday, at the request of the states, we made some additional revisions to clarify the proposed decree and better capture the intent of the parties.
"We hope that the remaining states will join in this agreement so that everyone can focus on the future and avoid the unnecessary costs and delays of further litigation," he said.
However, Microsoft itself on Tuesday asked for a delay that would put the states' antitrust case on hold until the Tunney Act review is complete. The judge denied that request. Lawyers for the states joining the settlement said the modifications they won would broaden the disclosures Microsoft must make to rivals about the operation of its powerful server software.
By adding the phrase "or the Internet" to one section, lawyers for the states said they required Microsoft to reveal technical details about servers other than just those used for office networks. That slight change could broaden the settlement to cover Microsoft's future business strategies of providing Internet services, they said.
The states also negotiated to establish a separate oversight committee, so the states can ensure compliance.
Others doubted whether these changes had any real significance.
"It's perhaps informative that a Microsoft spokesperson characterized them as inconsequential," Lockyer said. "That would be my view."
Knight Ridder Tribune
