States ponder new suit against Microsoft

D. Ian Hopper

Thursday, June 21, 2001 | 11:02 a.m.

WASHINGTON -- State attorneys general worried about the potential market impact of Microsoft Corp.'s new Windows XP and other products are discussing whether to file another antitrust lawsuit against the computer software maker.

The state attorneys are considering such action even as a federal appeals court reviews the states' original lawsuit alleging that Microsoft competes unfairly.

As attorneys general from across the country meet this week in Vermont, a group funded by Microsoft's competitors is trying to convince them that its latest product plans are more of the same.

The group, called ProComp, includes Oracle, Sun Microsystems and Netscape, a subsidiary of AOL Time Warner. ProComp director Mike Pettit wrote a 59-page paper criticizing Microsoft's practices and gave the presentation to the states Wednesday.

Iowa Attorney General Tom Miller said he agrees with their point of view.

"Microsoft seems to be using much of its power to preclude competition on a new platform," said Miller, who organized the states' strategy in the current suit.

Last year U.S. District Judge Thomas Penfield Jackson ordered Microsoft broken in two for antitrust violations. He concluded the company unfairly tied its Windows operating system to its Explorer Web browser in order to gain and keep a software monopoly.

Microsoft appealed to the federal appeals court in Washington and awaits a decision.

Miller and Connecticut Attorney General Richard Blumenthal said they're particularly concerned about Microsoft's plans to bundle new features into Windows XP, due out this fall, and to offer new Web-based subscription services.

"They certainly raise the prospect, if not the probability of the same dangers and potential harms that resulted from past practices that were proved at trial," Blumenthal said.

Microsoft says any talk of additional litigation is premature since most of the products cited by critics aren't even finished yet. It says its goal isn't to monopolize but to give customers want they want.

"The key point in this whole process is that users decide if they want to use Web services and what information they want to give," Microsoft spokesman Jim Cullinan said.

Late Wednesday Blumenthal and Miller released a joint statement stressing that they were concentrating on the current case.

"We have no current plans for a second lawsuit," they said. But they added that the company's announcements about products such as Windows XP "indicate to many of us that Microsoft may be repeating its efforts to maintain and extend its monopoly much more broadly into the Internet."

Asked about the statement Wednesday night, Blumenthal said that by "current plans," he and Miller meant that a second antitrust suit was not imminent. However, he said such a suit remained an option.

Blumenthal said the states were discussing the possibility of a second lawsuit citing the new products as one of several options, even as the current case awaits a ruling in federal appeals court.

"We haven't reached a point where we're discussing it publicly," Blumenthal said in a separate telephone interview. "We have been exploring strategies, consulting experts, doing legal research."

Another option, according to Miller and Blumenthal, is to bring up concerns about the new products as part of the current case if the appeals judges send it back to a lower court.

Blumenthal said the attorneys general also are prepared to continue to pursue their case against Microsoft even if the Bush Justice Department seeks to settle the current case.

"We have never said that the Justice Department was an essential partner," he said. "Certainly a critically important one, but never a prerequisite to our pursuing the case. We are absolutely determined to pursue this case."

Windows XP, due to be released in October, will enhance the company's recently announced Internet initiatives, called Hailstorm and .NET. The company's new philosophy is to encourage customers to store their data on the Internet, accessible from anywhere on any device.

Hailstorm and .NET rely on Microsoft's software architecture on network servers, desktop computers and handheld devices. Windows XP, too, will offer for free many new features that competitors charge for.