Microsoft Corp.’s lead attorney warned in federal court Monday that if the nine states that refused to settle their antitrust case against the software giant prevail, Microsoft would be forced to take its pervasive Windows operating system off the market.
That would cause a “devastating” effect on the company and consumers, argued Microsoft attorney Dan Webb.
For their part, the states accused the Redmond, Wash.-based company of continuing the type of anti-competitive behavior two federal courts said made it guilty of violating the nation’s antitrust laws. The states’ lawyers told the federal district judge hearing the case that Microsoft greatly exaggerated the effects of their proposed constraints on the company’s behavior.
The claims and counterclaims came on the first day of a proceeding to determine how to best restore competition to the software industry Microsoft was found guilty of harming.
It was clear from the hearing’s start that each side believes the winner will largely depend on U.S. District Judge Colleen Kollar-Kotelly’s view of the case.
Microsoft would prefer that she limit her decision to the company’s behavior in the market defined by personal computers that use Intel Corp. or similar microprocessors.
That narrow market was at the core of the nearly 4-year-old antitrust lawsuit and Microsoft argued there was no legal basis for the judge to go beyond that. Indeed, Webb argued that going beyond that would essentially require a new antitrust trial.
But the states say that if Kollar-Kotelly considers only Microsoft’s view, she won’t stop the company from hurting competition in new technologies in much the same way the company did in the personal computer market. New products, like hand-held devices, cell phones and television set-top boxes, are increasingly important.
The dissenting states urged the judge Monday to expand the relevant market to protect newer products.
Webb, the former U.S. attorney in Chicago, painted a bleak picture of what would occur if the dissenting states had their way. Their proposal is “extraordinarily harsh and unfair,” he said, calling it “much worse” than a breakup of the company.
A breakup was ordered by U.S. District Judge Thomas Penfield Jackson during the court trial but reversed by the U.S. Court of Appeals for the District of Columbia. The appeals court remanded the case to a new judge for a rehearing on what remedy should be imposed.
Besides leading Microsoft to pull Windows, the states’ view would cause the confiscation of billions of dollars of Microsoft’s intellectual property while harming the software giant’s innovation, Webb said. “All to the detriment of the consumers and the computer industry,” he argued. “The only beneficiaries would happen to be Microsoft’s competitors.”
Microsoft has long argued that companies like AOL Time Warner, Sun Microsystems and Oracle pushed the U.S. Justice Department and the 18 states that were involved in filing the antitrust lawsuit. Those competitors have sought an advantage in the courts they could not gain in the marketplace, Microsoft has said.
The Justice Department and nine states, including Illinois, have a proposed settlement with Microsoft that Kollar-Kotelly is also reviewing.
The dissenting nine states have continued their litigation because they consider the sanctions in the proposed settlement to be too weak to make a difference in Microsoft’s behavior.
Brendan Sullivan, the lead lawyer representing the dissenting states, said tough measures were needed against Microsoft because it was an incorrigible bully when it came to anti-competitive behavior.
The states want Microsoft, among other things, to create a version of its Windows operating system that allows its Internet Explorer browser and other applications to be easily removed or added.
Microsoft says such a move would create chaos.
More Top Picks Best Hydration Backpacks
“We say the remedy must be strong because it must be able to control one of America’s most powerful companies,” said Sullivan. “The remedy must unfetter the market. … “Ours is designed to stop Microsoft from killing competitive threats.”