Microsoft denounces states' plan

By Rob Kaiser
Tribune staff reporter

February 13, 2002

Leaving little room for compromise, Microsoft Corp. Chief Executive Steve Ballmer on Tuesday loudly dismissed the demands of nine states opposing the settlement agreement in the software giant's antitrust case, calling the holdout states' proposals "absolutely unbelievable."

Ballmer, who is in Chicago to introduce Microsoft's new suite of software development tools Wednesday, said the remedies sought by the states would "debilitate" Microsoft.

"If that order was entered today, I would not even know how to comply," Ballmer said during an interview with the Tribune editorial board.

A pair of state attorneys general countered that they are seeking to block Microsoft from using its monopoly powers, which the company was found to have abused, and dismissed Ballmer's comments as being similar to dire statements the company made when it faced a potential breakup.

"It's sort of a return to that level of rhetoric," said Tom Miller, the Iowa attorney general.

Microsoft reached a settlement in its antitrust case with the U.S. Justice Department and nine other states in November, but the holdout states have continued to press for further restrictions to be placed on the company.

A hearing on remedies in the case is scheduled to start March 11.

In court filings, the nine opposing states have said they want Microsoft to offer a stripped-down version of its Windows operating system that excludes Microsoft software for playing music, sending instant messages and browsing the Internet.

Other proposals from the holdout states include forcing the company to license the code to Internet Explorer, support Sun Microsystems' Java program in Windows and offer its Office suite on Linux's rival operating system.

Ballmer said it is clear to him that most of the language in the proposals from the dissenting states was drafted by Microsoft competitors and would limit the company's ability to engineer new Windows products. "It's outrageous," he said, and "will dramatically harm consumers."

The settlement Microsoft reached with the Justice Department and nine other states imposes restrictions on the company, but well short of what the government had sought.

Under the proposed settlement, computer-makers will have more freedom in determining what will appear on the first screen users see, giving them the ability to prominently display logos of Microsoft competitors. It also restricts Microsoft from retaliating against companies, setting up certain restrictive pricing agreements and holding back particular software code.

Given the settlement already on the table, Ballmer said Microsoft can't make separate settlements with other states that go beyond the terms of its deal with the federal government.

"Now we're in an almost impossible Catch-22 situation," Ballmer said.

Yet Shane Greenstein, a professor at Northwestern University's Kellogg Graduate School of Management who studies the commercialization of technology, said Microsoft has even more motivation to fight tougher restrictions, which he said could explain Ballmer's tough talk.

Microsoft is planning Wednesday to introduce Visual Studio .NET, the latest portion of its plan to move software development from the Internet to a new platform that recognizes numerous computer languages.

Greenstein said a court ruling placing restrictions on the development of .NET would be "quite costly to them."

While Ballmer made the idea of a second settlement seem unlikely, the holdout state representatives were not as definitive.

"We're always open to talk about a settlement that truly upholds the law and protects consumers," said Connecticut Atty. Gen. Richard Blumenthal.

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