Microsoft's proposed antitrust remedy criticized

Former Netscape CEO says plan would allow illegal conduct to go on


WASHINGTON - The penalties Microsoft Corp. has proposed in the latest phase of a landmark antitrust case would allow the company to engage in the same kind of illegal conduct that helped it quash Netscape Communications' Web browser in the 1990s, James Barksdale, Netscape's former chief executive, told a federal judge yesterday.

On the witness stand, Barksdale, perhaps Microsoft's most outspoken and persistent critic, faced Microsoft's lawyer, John Warden, in what sometimes seemed like a reprise of Warden's cross-examination of Barksdale in the first phase of the long-running trial in October 1998.

Yesterday, Warden questioned Barksdale on some of the more contentious issues in the current phase of the case, which will determine the penalties against Microsoft in light of an appeals court decision that found the company illegally maintained its monopoly on its Windows operating system.

Nine of 18 states have returned to U.S. District Court seeking tougher penalties against the software company after they rejected a proposal between the Justice Department and Microsoft to settle on penalties in the antitrust case.

The nine states pursuing tougher penalties contend that Microsoft will do the same with new technologies, from hand-held computers to instant-messaging software, unless the court carefully regulates how Microsoft designs its code and interacts with other technology companies.

"When you say that instant-messaging software is a real threat to the operating system," Warden asked Barksdale, "are you saying anything other than that any software product could be taken and extended and extended and extended over time by anyone into an operating system?"

"I remind you only 20 years ago the most sophisticated application you could get on a PC were little games," Barksdale replied. "They all start small. They can grow. Let them have a chance."

In written testimony submitted earlier, Barksdale wrote, "As I review Microsoft's proposed remedy, I reach the unfortunate conclusion that it would not have helped Netscape in the mid-1990s by preventing Microsoft's anti-competitive behavior."

The Justice Department and nine states, including Maryland, have reached a proposed settlement with Microsoft, but nine other states - California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah and West Virginia - along with the District of Columbia said they were dissatisfied with that settlement and have proposed much stiffer remedies. Consequently, they are back in U.S. District Court over penalties.

The states' success hinges largely on whether they can convince U.S. District Judge Colleen Kollar-Kotelly that the court should impose penalties that modify Microsoft's conduct with regard to current products and future products, such as its .NET Web services software initiative, that were not a part of the original case.

Kollar-Kotelly repeated yesterday that she would not allow new accusations of anti-competitive behavior to be introduced at the trial, whose purpose is solely to determine the proper remedy for the illegal conduct Microsoft was found to have perpetrated. But she appeared to continue to leave the door open for the states to draw analogies between Microsoft's past and current conduct.

At the end of the court session, she raised a question that could have a significant bearing on the penalty: whether the findings of fact by U.S. District Judge Thomas Penfield Jackson that were not specifically overruled by the Court of Appeals are still binding.

A federal appeals court narrowed Jackson's findings and threw out his order to break up Microsoft, but Kollar-Kotelly said, "My view would be that the District Court findings are intact."

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