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Texas rethinks Microsoft suit

Amid concerns from the computer industry, the state's attorney general is rethinking taking any antitrust action against Microsoft.

In a surprise announcement, Texas's attorney general said today he is rethinking taking any antitrust action against Microsoft because computer companies in that state are raising concerns that such a suit may hurt the industry.

The announcement may mean the front is weakening against Microsoft. Attorneys general from Texas, New York, and Connecticut have led the states' efforts regarding the software giant. The lawsuits are expected as soon as this week, but Texas attorney general Dan Morales said he would meet with those concerned computer companies "over the next few weeks."

Other states have given no indication that they plan to wait that long to make a decision. Speculation is growing that the Justice Department also is preparing to file another suit against Microsoft.

"A number of states have been looking into possible antitrust violations by Microsoft [and] Texas has participated in this multistate effort," Morales said in a statement. "However, over the past few weeks, my office has received letters from several officials of Texas's computer industry who have expressed concerns that the filing of a lawsuit against Microsoft may negatively impact their companies as well as the consumers of the state."

He went on to add: "Before contemplating any legal action against Microsoft, I feel it is prudent and wise to personally hear the concerns of our Texas-based computer companies. I expect to meet with some of them over the next few weeks to discuss these concerns. In the meantime, we will continue to look into this matter to ensure that Texas consumers are protected."

The statement comes less than two weeks after 26 Microsoft partners, many of them high-tech giants, signed a letter to assistant U.S. attorney general Joel Klein warning regulators that their legal action could have serious economic consequences. The letter was signed by Compaq chief executive Eckhard Pfeiffer, along with the CEOs of Computer City, CompUSA, Dell Computer, Hewlett-Packard, and Intel.

Compaq, Computer City, CompUSA, and Dell all are based in Texas.

Not only has Texas's Morales been a part of the group investigating Microsoft, but also his office already has sued the software giant. In November, the state attorney general's office sued Microsoft, accusing the company of illegally interfering with an ongoing investigation into its business practices.

In February, however, a Texas judge dismissed the lawsuit. Texas District Court Judge Joseph Hart of Austin threw out the suit on the grounds that the state failed to show that the confidentiality agreement had in any way interfered with its probe of the software giant.

Microsoft spokesman Tom Pilla said Morales's statement was gratifying. "We appreciate the consideration with which the attorney general is approaching this very important issue," he said. "We believe it is important to take into account the views of customers and businesses."