Economist Retreats From Position On Microsoft Competitors

The allegation has been a central part of Microsoft's case, supported by documents and e-mails from companies such as AOL Time Warner, Novell and Sun Microsystems. University of Virginia economics professor Kenneth Elzinga said in written testimony that the competitors "developed" the states' penalty proposal.

Under questioning by states' lawyer Steven Kuney, Elzinga conceded that language in the states' proposals are "almost identical" to those offered by the previous trial judge in the case as well as the judge who tried to negotiate an earlier settlement.

"Are you testifying under oath that that provision was developed by Microsoft's competitors?," Kuney asked Elzinga.

"No," Elzinga replied. "Perhaps 'supported' is a better word."

U.S. District Judge Thomas Penfield Jackson, who ordered that Microsoft should be broken in two, instituted several penalties involving the disclosure of technical information and a ban on exclusive deals that were adopted by the states.

A federal appeals court upheld many of the antitrust violations found by Jackson but overturned the breakup order and preempted his penalties. The court removed Jackson from the case _ in part because of improper out-of-court statements about Microsoft _ and charged U.S. District Judge Colleen Kollar-Kotelly with the task of developing a new antitrust remedy.

Judge Richard Posner, Kuney said, was the author of the states' most controversial proposal that would force Microsoft to release a modular version of the Windows operating system in which computer makers could swap out features with competitors' programs. Posner refereed a failed round of settlement negotiations between Microsoft and the government.

The government and nine other states eventually reached a settlement with Microsoft late last year for lesser penalties than those sought by the remaining states.

Kuney suggested that Elzinga should have considered Jackson's and Posner's contributions.

"That had never occurred to me," Elzinga said. "I have to say that had never entered my mind."

Elzinga has testified as an expert witness for Microsoft in two previous cases, and acknowledged that Microsoft had funded some of his early research into the software industry.

Microsoft paid Elzinga and two co-authors to write a 2001 academic paper blasting the case. They wrote that Microsoft's competitors asked for help from the Justice Department only because Microsoft made "better products at lower prices."

In testimony Wednesday, Elzinga said he evaluated claims that the negotiated settlement contains numerous loopholes that render it ineffective and found them "not to withstand scrutiny." But under questioning by Kuney, he conceded in several instances that he did not have the technical expertise to evaluate the alleged loopholes.

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.