18 States Taking a Tougher Stance on Microsoft


As the Microsoft antitrust case moves into a new phase of legal maneuvering and a possible negotiated settlement, the role of 18 state attorneys general who joined the federal case as plaintiffs may become especially important.

In recent months, the state officials have been more outspoken than their federal counterparts about the need for imposing stringent penalties against the software giant. That suggests they could represent an important counterweight to any move by the Justice Department to take a softer line on Microsoft's antitrust violations.

At this point, there are no indications of a shift in the federal government's antitrust policy under the new Republican administration. Federal and state officials both expressed equivalent satisfaction with Thursday's ruling by the U.S. Court of Appeals for the District of Columbia. The judges unanimously overturned a lower-court judge's order breaking up Microsoft, but they left intact his core ruling that the company had used illegal means to maintain its monopoly in personal computer operating system software. They ordered a lower court, and a new judge, to consider new penalties for the company.

U.S. Atty. Gen. John Ashcroft called the ruling "a significant victory" for the government plaintiffs, a view that was echoed by several of the state attorneys general.

But after the ruling, it was the state officials who were most outspoken about the next steps the plaintiffs should take. In a conference call immediately after the release of the ruling, several of them carefully explicated the ruling's details and outlined possible strategic moves in the lower court.

Among other things, they expressed the intention to examine Microsoft's development and marketing of its forthcoming Windows XP operating system--a program that rivals contend includes numerous elements that could stifle competition.

Several state officials also said they will continue to work for the most stringent possible penalty--Microsoft's breakup into two independent parts--even though the higher court signaled its distaste for the remedy.

"The court didn't rule out a breakup," Connecticut Atty. Gen. Richard Blumenthal said. "It reaffirmed the discretion of the trial court to right the wrong."

It is possible that the states' greater eagerness to analyze the ruling reflects their longer experience with the case. Charles A. James, the federal antitrust chief, has been on the job for scarcely two months, while some state attorneys general have participated in the Microsoft litigation since its inception in 1998.

"There's greater familiarity with the case among the involved attorneys general," California Atty. Gen. Bill Lockyer said. "They're better able to respond to a complicated ruling."

Thus far, state officials are expressing confidence that their relationship with federal antitrust regulators will not change.

"We have worked well together in the past with the DOJ, with briefs and [trial] arguments all done jointly," said Iowa Atty. Gen. Tom Miller, a leader of the state plaintiffs group. "I hope that continues."

But the change of administration in Washington could introduce a change in the political dynamics of the relationship. For one thing, 14 of the 18 state attorneys general participating in the case are Democrats. And while Ashcroft, a political appointee, is bound to implement the policies of his boss, the state attorneys general are elected officials. Some could face local pressures to be more aggressive than the federal government concerning Microsoft.

Lockyer, for example, asked for a $2.7-million appropriation in this year's state budget specifically to pursue continued litigation against Microsoft. (The budget is still under legislative consideration in Sacramento.)

That reflects California's stature as the home of thousands of Microsoft competitors. "As this is the heart of the high-tech industry, California consumers and businesses are disproportionately injured by Microsoft's behavior," he said.

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