Lawyers For States Suing Microsoft Accuse Firm Of Arrogance In Antitrust Case

"Somehow they know better than anybody else what is good for the PC ecosystem," lawyer Steven Kuney chided, referring specifically to earlier testimony by Microsoft Chairman Bill Gates. "And what is good for Microsoft is good for the economy, consumers and everybody else."

Kuney urged the judge to approve penalties proposed by the states, which are far more sweeping than those the company agreed to in a settlement with the federal government last year.

States' lawyer Brendan Sullivan, speaking for only the third time during the penalty hearings, also targeted Gates. Sullivan said Gates and other Microsoft executives used "thuggish-like tactics,"and rejected the executive's assertion that the penalties would cause a 10-year hibernation of innovation at Microsoft.

"I don't think Microsoft is going to rename its campus Sleepy Hollow," Sullivan said.

Microsoft lawyer John Warden said the state proposals are "affirmatively harmful to consumer welfare" and unfair to Microsoft.

Warden highlighted several state proposals, including ones that would put the Internet Explorer Web browser into the public domain and force Microsoft to let companies use its Office productivity software for other operating systems.

"These punitive, confiscatory provisions go far beyond anything in the prior judgment," Warden said.

To comply with the judge's instructions, Kuney prioritized the states' proposals, saying that making sure Microsoft discloses enough technical information to software developers is most important to the health of the technology industry.

That information would make sure that competing software works with Microsoft's dominant Windows operating system as well as Microsoft's own products. Microsoft has been criticized for holding back such information.

Kuney also mentioned more flexibility and protection for computer makers from restrictive contracts and retaliation by Microsoft. Several executives, including those from Gateway, complained about Microsoft threats.

"The records of threats ... is stunning," Kuney said, calling threats "part of the fabric of how they do business."

Kuney said the federal settlement stops Microsoft from some forms of retaliation, but does nothing to keep the company from threatening competitors and partners.

Sullivan said those threats were part of an "intricate, detailed strategy that became a multiyear battle plan" against Netscape's Navigator Web browser and Sun Microsystems' Java programming language.

Both products were initially popular with consumers and developers, but an appeals court found that Microsoft's illegal business practices smothered them before they could threaten Microsoft's Windows monopoly.

Sullivan accused Microsoft of minimizing its own actions while overstating what the states' penalties would do to the economy.

"I suggest to you that Microsoft still doesn't get it," Sullivan told U.S. District Judge Colleen Kollar-Kotelly, "and you're the one to tell them what it's all about."

Kollar-Kotelly told both sides to focus their arguments on modifying competing penalty proposals rather than their differences.

During the hearings, lawyers for the states at times posed hypothetical questions based on changes in their proposed penalties. Kollar-Kotelly indicated in her order that she may want the states to make those changes, and Kuney said the states would be willing to make some modifications.

Any changes Microsoft makes would have to be agreed to by the Justice Department. The settlement has yet to be approved.

The original judge in the antitrust case, Thomas Penfield Jackson, ordered Microsoft broken into two companies. An appeals court upheld many of the violations but reversed the breakup order and appointed Kollar-Kotelly to determine a new punishment.

States that rejected the government's settlement with Microsoft last fall and are pressing for tougher penalties are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia.

Copyright © 2002 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.