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Rivals come up short in decision

In explaining her decision, a federal judge says Microsoft competitors would have unfairly benefited from a harsh antitrust remedy.

WASHINGTON--U.S. District Court Judge Colleen Kollar-Kotelly said Friday that she rejected harsh antitrust punishments for Microsoft because they would unfairly benefit its competitors.

In her strongly worded decision, Kollar-Kotelly said that the remedies proposed by nine state attorneys general were so outlandish that they amounted to an "unjustified manipulation of the marketplace" designed to give competitors such as Sun Microsystems, Apple Computer, and Red Hat an "artificial advantage."

In a 344-page decision, Kollar-Kotelly dismissed many of the proposals as based on a misunderstanding of antitrust law and the purpose of 32 days of remedy hearings this spring.

"Microsoft's competitors appear to be those who most desire these provisions and, concomitantly, are the likely beneficiaries of these provisions, while other competitors in the relevant market would not necessarily benefit. In bringing these types of proposals before the court, (the states) again misunderstand the task presently before the court," Kollar-Kotelly wrote.

Richard Green, a vice president at rival Sun Microsystems, testified during the remedy hearing in March that Microsoft's Java Virtual Machine was unfairly incompatible with his employer's. But Kollar-Kotelly said Sun's complaints were merely an attempt to attack a competitor. "The incompatibility of Microsoft's JVM is a non-issue...Mr. Green's testimony is revealed as little more than an attempt to advance Sun-compliant Java technologies through this proceeding," the judge wrote.

Sun representatives took issue with Friday's ruling. "The weak steps that Microsoft has taken to comply with the requirements already show that the settlement will be ineffective in curbing Microsoft's monopolistic and anti-competitive practices," Sun's Special Counsel Michael Morris said in a statement. "We believe that the non-settling states have ample grounds to appeal this decision, and we hope that they do."

Sun vowed to keep fight a civil suit it filed in March that seeks more than $1 billion in damages and claims Microsoft's monopoly impeded the use of Sun's Java software platform.

"We will...continue to pursue our civil case and to cooperate with the European Commission's case against Microsoft to ensure that the company does not continue to use its monopoly position to become the gatekeeper of the Internet," Morris said.

AOL Time Warner, another traditional Microsoft adversary, gave a more tempered response to the decision.

"Judge Kollar-Kotelly made a weak settlement stronger, and created some additional protections for consumer choice and competition," said AOL Time Warner General Counsel Paul T. Cappuccio. "The effort to constrain Microsoft's monopoly has neither ended, nor been without result."

Both companies were careful to note that the European Commission is pursuing its own antitrust investigation into Microsoft's activities, with a scope that reaches well beyond what Kollar-Kotelly deemed relevant to Friday's decision. Private companies including Netscape and Sun also are pursuing their own independent claims against Microsoft, they said.

The most prominent technology companies, including Oracle, Apple, Gateway, Hewlett-Packard, Red Hat, Intel and Dell Computer declined to comment on the judge's ruling Friday.

States put on best face
Kollar-Kotelly also took issue with the states' idea of auctioning off rights to port Microsoft Office to other operating systems.

"If Red Hat purchases one of the auctioned Office licenses, as it plans, Red Hat will benefit from Microsoft's twenty years of heavy investment in Microsoft Office," she said. "Red Hat would receive this benefit despite the fact that it has not devoted any effort or money to the development of an office productivity suite to compete with Microsoft Office and run on Linux."

In a call with reporters on Friday evening, the still-litigating states tried to put the best face on a ruling that dashed their hopes for an easy victory. The attorneys general would not say whether they would appeal.

Bill Lockyer, the attorney general of California, which is home to many Microsoft rivals, called the decision "neither a total victory nor a total defeat."

"We urged the court to look ahead and expand (antitrust) doctrine to new businesses," Lockyer said. "The court said if you want to go there, file a new lawsuit. That obviously remains an option."

In her decision on Friday, Kollar-Kotelly did agree with the non-settling states on some issues, such as imposing additional conditions on Microsoft dealing with boot sequences for Windows and its relationship with computer makers.

Kollar-Kotelly's decision at least partially vindicates critics of the antitrust suit, who have complained for years that Microsoft's rivals had lobbied the Clinton administration to bring the lawsuit.

In 1998, then-Netscape CEO Jim Barksdale admitted that he met with DOJ antitrust officials about a dozen times, including a breakfast meeting with Assistant Attorney General Joel Klein, to discuss the lawsuit before it was filed.

"She recognized and stated explicitly that some of the remedies that the states wanted would give states an unreasonable advantage," said Jonathan Zuck of the Association for Competitive Technology, a free-market trade association in Washington.

"The competitors were acting unreasonably, and they still are. They're saying this is outrageous since they'd like this to go on forever."

News.com's John Borland contributed to this report.