State Accuses Economist Of Bias In Microsoft Case

Lawyer Steven Kuney said University of Chicago economist Kevin Murphy relied on data contrary to court records and Microsoft's earlier statements.

Murphy listed several pages of research papers on the resume he provided to the court, but nothing more recent than 1998. He specialized in labor economics.

Under cross-examination from Kuney, Murphy conceded that he started writing about software later, and his research was funded by Microsoft. In those papers, he asserted that monopolies can be good for consumers.

Murphy said he has worked as a consultant for Microsoft for several years.

The nine states want U.S. District Judge Colleen Kollar-Kotelly to force Microsoft to create a "modular" version of its flagship Windows software that could incorporate competitors' features. The states also want Microsoft to divulge blueprints for its Internet Explorer browser.

The federal government and nine other states settled their antitrust case against Microsoft last year for lesser penalties.

The original judge in the case, Thomas Penfield Jackson, ordered Microsoft broken into two companies after concluding that it illegally stifled competitors. An appeals court reversed the breakup order and appointed Kollar-Kotelly to determine new punishment.

Murphy attacked the antitrust penalties proposed by the nine states that did not settle, saying the penalties would more likely help Microsoft's competitors than consumers.

The economist said he concluded that Netscape's Navigator Web browser and the Java programming language were not legitimate threats to Microsoft's Windows monopoly. That idea is a key portion of the case, because software developers could write programs to run on Navigator and Java that would work on computers running non-Microsoft operating systems.

Murphy dismissed contradictory statements by Microsoft, such as one in which Microsoft executives specifically referred to Netscape and Java as threats to Windows, as hyperbole designed to draw the interest of Microsoft Chairman Bill Gates.

"You've got to think what gets Bill Gates excited," Murphy said. "What gets him worried."

Kuney said Murphy's conclusions on how Microsoft used unfair contracts with Internet service providers to push Netscape out of the market differed from official court findings.

Murphy admitted that he calculated Netscape's loss differently, but said that his conclusion _ that the contracts didn't harm Netscape much _ was actually consistent with the court conclusion that they caused significant harm to competition.

Scott Borduin, a vice president at software company Autodesk, also testified in Microsoft's defense. Autodesk creates the popular AutoCAD architectural software.

Borduin said that in his experience, Microsoft provides significant support to software developers.

The states' penalties "will reduce the cycle of innovation and raise costs," Borduin wrote.

Microsoft is expected to call about 30 witnesses, about double the number called by the states. Only one Microsoft employee, the head of the Microsoft Network Internet service, is likely to testify this week.

States that rejected the government's settlement with Microsoft and are continuing to pursue the antitrust case are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia.

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