States, DOJ to meet on Microsoft
State prosecutors are planning to meet next week with the Justice Department to discuss possible joint actions against Microsoft, sources say.
Prosecutors from six to a dozen states are expected to attend the session, which would be the first time federal and state officials have met face to face to discuss Microsoft's business practices. Prosecutors have pursued various inquiries into Microsoft, but their actions so far appear to have been independent of one another.
Speaking on the condition of anonymity, one scheduled participant characterized the meeting as an exploratory session in which parties would "try to see if there is common ground among the states and the DOJ in order to move forward" on potential joint efforts against Microsoft.
"There is such a large set of anticompetitive behaviors that Microsoft is being charged with that people are naturally going to disagree about what is the worst," this source said. Referring to a combined action a number of states have taken against cigarette companies, this source added: "It's not like tobacco, where the egregious behavior was singular and clear. Here there's a wide range of issues."
A spokesman said Microsoft executives are not aware of any upcoming meetings between state and federal officials, but said the company is continuing to cooperate with their investigations. "It's important to remember that all of the hallmarks of healthy competition are in place in this industry," said Microsoft's Jim Cullinan. "Prices continue to fall, innovation is thriving, barriers to entry are low and competition is vigorous. Consumers are benefiting from the tremendous competition in the industry."
It remains unclear how the meeting will fit into the expanding offensive against Microsoft. Although some legal observers say the states may have little to add to the federal investigation, their attorneys general could still bring action on their own or bolster particular aspects of the Justice Department's case, which has taken a number of turns.
Already pressing a high-profile enforcement action alleging that Windows licensing requirements violate terms of a 1995 antitrust settlement, the federal government has said it is also pursuing a much broader investigation of Microsoft. The Justice Department is closely scrutinizing all kinds of activities that might be the subject of a new lawsuit, ranging from deals the company brokers with content companies to the software giant's $150 million investment in Apple Computer.
At the same time, individual state investigations are becoming increasingly visible. Earlier this month, New York Attorney General Dennis Vacco announced that he and ten other state prosecutors had subpoenaed Microsoft for information relating to possible anticompetitive activities. The announcement was made two months after representatives from at least nine states met in Chicago to discuss Microsoft without participation by the Justice Department.
"In a high-profile kind of investigation like this, both sides want to reassure the other that they're not in front of the other or working at cross purposes," said Kevin Arquit, a former Federal Trade Commission attorney who practices antitrust law with the firm of Rogers & Wells. "[A meeting] is consistent with the relationship the two have presently."
Another reason a meeting makes sense comes down to relatively lean state resources and experience in antitrust matters. Robert Lande, a professor specializing in antitrust issues at the University of Baltimore School of Law, estimated that a full-scale antitrust suit against Microsoft could require at least 50 people--and possibly many more--working full time on the case.
Besides numbers, the federal government brings a significantly greater expertise in the arcane world of antitrust and technology litigation, several analysts pointed out. For the most part, "the states historically have not had any real expertise or skill in handling antitrust cases," said William Kovacic, an antitrust professor at George Mason University School of Law. "In terms of analysis, they don't bring much to the table."
Lloyd Constantine, a former chief of New York's antitrust division who also headed the antitrust task force for the National Association of Attorneys General, agreed. Because the states are at such a disadvantage prosecuting Microsoft, he said, they have good reason to join forces with federal antitrust enforcers who have been investigating the software giant for more than seven years.
In addition to state and federal investigators, the Redmond, Washington-based company is defending itself against a private antitrust suit filed by Caldera and is facing scrutiny from the Senate Judiciary Committee and arms of the European Commission and the Japanese government.
While the Justice Department declined to confirm or deny the existence of a meeting with state prosecutors, an official said such a session would not be significant. "Communication between states and the Justice Department about matters that are pending before both is quite routine and in itself unimportant," said the official, who did not want to be named.
Constantine agreed, adding that states most likely would be relegated to playing a "supporting role" in any new case the Justice Department might bring. "I don't think [Microsoft] is going to have to spend a lot of time worrying about the states."
Others were not so sure. "A meeting would be unusual," said the University of Baltimore's Lande, noting that state antitrust enforcers rarely meet in person with their federal counterparts. Still, he cautioned, "a meeting doesn't necessarily mean they would bring a joint action."