Lockyer Squares Off With Microsoft

Just as its lengthy and expensive legal troubles appear to be ending, Microsoft Corp. is encountering fierce opposition from an unlikely source in settling its landmark antitrust case: California Atty. Gen. Bill Lockyer.

A populist politician first and a lawyer second, Lockyer has emerged as the new standard-bearer for Microsoft’s enemies in government, and he has come out firing.

Criticizing the Justice Department’s pending settlement as too weak, Lockyer said, “Maybe we need to create a 12-step program for their executives, where they start each morning saying, ‘I am a monopolist, I am a monopolist, I am a monopolist.”’

When Microsoft reached a tentative settlement of more than 100 consumer class-action lawsuits with a pledge to give software and other products to poor schools, Lockyer said, “It’s a little like Big Tobacco being found guilty of selling cigarettes to minors, and the remedy is for them to agree to give them free cigarettes.”

His rhetoric signals that he is unlikely to be satisfied with a slightly sweetened settlement overture.

Add to the mix Lockyer’s political know-how and ambitions for higher office, and the evidence suggests Microsoft won’t be free of its 3-year-old antitrust case for years to come.

Microsoft’s defenders accuse Lockyer of doing the bidding of the company’s big California competitors, including Oracle Corp. and Sun Microsystems Inc.

The coalition of nine states and the District of Columbia, which rejected the Justice Department-led settlement, filed their own requests for court-ordered sanctions against Microsoft on Friday.

The group asked that Microsoft sell a stripped-down, cheaper version of its operating system to stop the company from unfairly expanding its monopoly into new areas.

Lockyer, a 59-year-old Democrat, was crucial in hammering out that proposal, in part because he represents the state with the most money.

Lockyer obtained millions of dollars in extra antitrust funding from the state legislature, where he was Senate president pro tem before running for attorney general in 1998.

And he has helped keep the states together by brokering compromises on strategy and immersing himself in details of the case, while some of his peers depend more on their staffs, attorneys said.

“Sometimes he’s the only [attorney general] on the conference call,” said former Maine Atty. Gen. James Tierney, who has been advising the states on the case. “He’s extraordinarily involved.”

Lockyer hired litigator Brendan Sullivan to handle courtroom appearances for the holdout states.

Lockyer also has made some missteps, notably when he proposed that former President Clinton be appointed as a mediator, an idea that quickly fizzled.

His saber-rattling does not sit well with the opposition. A Microsoft spokesman said only that he hopes Lockyer will reconsider his opposition to the Justice Department antitrust settlement. The Assn. for Competitive Technology, a trade group that often acts as a proxy for the maker of Windows, was more pointed.

Lockyer’s inflammatory comments are “reflective of desperation and a complete departure from reason,” association President Jonathan Zuck said. “I’m certainly dismayed that he’s going to these extremes to carry the water for a few big companies in California.”

But Lockyer’s aggressive posture has given hope to Microsoft competitors who have been seething over the Justice Department settlement, which they say failed to break Microsoft’s monopoly grip on the personal computer industry.

The remarks “gave me confidence that he understands that the settlement is really a giveaway by the Bush administration,” said Dana Hayter, a Palo Alto lawyer at Fenwick & West who worked on the Justice Department’s Microsoft probe before leaving in 1997.

“He also understands that the settlement was inadequate to protect the interests of California consumers in having a robust and diverse innovation base,” Hayter said.

Some of the smaller states have promised to help pay Sullivan’s legal bills. But Lockyer’s ability to extract money from California lawmakers is an obvious benefit for the coalition.

Since taking office for a four-year term in 1999, Lockyer has secured funding for several projects, including an expanded nursing-home inspection force. Lawmakers gave him $9 million this year for energy-crisis work, though no suits have been filed to date.

Lockyer’s rainmaking ability also extends to his campaigns. During the most recent mid-term election cycle, when he was not before the voters, Lockyer managed to take in $1.1 million. Contributors included Microsoft archenemy Oracle, which has given him $50,000 in the last year.

Lockyer is widely expected to run for governor in 2006, and his stance against Microsoft will play well with some of the state’s richest potential contributors.

In addition to database software maker Oracle, the state is home to computer workstation maker Sun Microsystems and a network of smaller Silicon Valley companies that struggle daily against the Redmond, Wash., software titan.

Lockyer said he isn’t influenced by donations from Oracle and others, but he clearly welcomes the infusions.

“I’m appreciative of campaign support from any California businesses,” he said. “I hope eventually it might be more.”

While the big tech companies are finding a lot to like in Lockyer, he has spent most of his career leaning left. The son of an Oakland roofer, Lockyer joined the state Assembly in 1973 and worked to get food stamps to immigrants and to protect whistle-blowers.

In Sacramento, Lockyer was known as a tireless worker who would make pragmatic compromises with the opposition: One of them was the infamous “napkin deal” that temporarily barred California smokers from suing cigarette companies.

He earned a law degree while in the legislature but has never worked as a full-time lawyer or bureaucrat, unlike most of Microsoft’s legal adversaries.

That background has “pluses and minuses,” Lockyer said. “I defer to the legal expertise of the many fine attorneys associated with the effort. I probably add some energy and enthusiasm, as well as a bit of financial help.”

Lockyer’s critics, including some who worked for his Republican predecessor, Dan Lungren, who filed the state’s Microsoft case, say Lockyer cares more about policy issues than about enforcing the law or implementing the desire of the people.

They cite his unusual turn before the California Supreme Court, when Lockyer personally argued that Proposition 209, which bars the state from giving preferential employment treatment to women and minorities, shouldn’t trump a San Jose minority recruitment program for contractors. He lost 7-0.

“The failure of the state’s top law-enforcement officer to enforce this law has left many government agencies around the state believing they’re free to flout the voters’ will,” Denise Davis of the conservative Pacific Legal Foundation wrote in an opinion article.

Lockyer’s mouth also has gotten him in trouble, as it did when he suggested that Enron Corp. Chief Executive Kenneth Lay, who has not been charged with any wrongdoing in the collapse of the Houston energy giant, should be locked up with an affectionate inmate named Spike.

Yet even those who disapprove of Lockyer’s approach say he is managing his staff of more than 5,000 people well and that Microsoft would be better off facing someone else.

“He doesn’t really think as an attorney, but he’s very disciplined,” one former Lungren staffer said. “I’ve got to believe this is coming from his heart.”

And that means if Microsoft launches a major public-relations campaign to drum up opposition to Lockyer’s stance on the company, he isn’t likely to back down, other states’ attorneys general said.

Tom Miller, the Iowa attorney general who has long served as a spokesman for the states suing Microsoft, said Lockyer is indeed acting from true feeling.

“He speaks his mind and sticks to his beliefs,” Miller said. “He’s a savvy and experienced warrior.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Agreeing to Disagree

The remedies proposed by the nine states go further than the Justice Dept. settlement in many respects and add tough new provisions.

Issue: Enforcement

Justice Department: Three-member technical committee, filing reports to prosecutors.

States: Court-appointed special master with broad powers.

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Issue: Bundling

Justice Department: Microsoft may still commingle its operating system with media players and Internet browsers.

States: Microsoft must offer versions of its operating systems with as few extra features as computer companies want.

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Issue: Disclosure

Justice Department: Some technical information released when Microsoft puts out a major test version of a new Windows release.

States: Data released as soon as Microsoft gives its own application programmers the information.

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Issue: Retaliation

Justice Department: Can’t charge computer makers more or punish them if they sell non-Microsoft products.

States: Broadly expands definition of retaliation, and can’t retaliate in other ways, such as withholding technival assistance

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Issue: Computer company freedom

Justice Department: Computer firms can use menus and shorcuts to promote non-Microsoft programs if Microsoft allows those types of programs to be promoted. They can automatically set a middleware application of their choice to launch if Microsoft makes rival middleware that would otherwise start.

States: Computer firms can do virtually anything they like with the appearance of Windows-based software, including make changes to the initial screens, menus and default settings.

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Additional state remedies:

Microsoft must license Internet Explorer browser to all, free of charge.

Must distribute Java functionality with its operating systems.

Must license its Office productivty software, through an auction, for use on other computer platforms, such as Apple’s operating system and Linux.