MS antitrust probe widens

With Microsoft facing renewed antitrust criticism, attorneys general from Oregon, Connecticut, New York, and California join a probe into the company's marketing practices.

4 min read
Oregon today added itself to the growing list of states that are conducting a probe into Microsoft (MSFT) over antitrust issues, CNET?s NEWS.COM has learned.

Other states to recently join the widening number of investigations by attorney general offices include Connecticut, New York, and California.

The states join Massachusetts and Texas, which began their investigations of Microsoft late last year. The states are looking into Microsoft's plans to bundle its latest Web browser, Internet Explorer 4.0, with the next version of the Windows operating system. Concern centers on whether Microsoft is using its market position to prevent computer makers from installing competing browsers in their machines. Also under investigation is whether Microsoft requires its suppliers to disclose information on federal or state inquiries.

Jan Margosian, a spokeswoman in the attorney general's office in Oregon, confirmed that the state has been investigating Microsoft since February in connection with complaints made by consumers. The probe concerns alleged unlawful trade practices, which would fall under an antitrust issue if Microsoft's behavior is found to be aimed directly or indirectly at competitors, said Rich Gray, an attorney specializing in antitrust law at Bergeson, Eliopoulos, Grady & Gray in San Jose, California. Margosian declined to give further details, other than to say the parameters of Oregon's inquiry don't mimic the other states' anti-trust investigations.

Meanwhile, Connecticut Attorney General Richard Blumenthal said his agency recently started its investigation after receiving complaints about Microsoft?s business practices from a number of the state?s residents and businesses.

After determining that Connecticut would take up an antitrust probe into Microsoft, Blumenthal contacted attorney general offices in New York, California, Texas, and Massachusetts regarding their respective investigations.

Blumenthal said his agency is looking into the basic question of whether Microsoft is using its dominance in a particular market, namely operating systems, to leverage itself in ancillary software applications, with its main focus trained on Web browsers.

"Is Microsoft trying to dominate or exercise undue power on the market?" Blumenthal asked rhetorically.

Should that be the case, he said state and federal antitrust laws would be applied. But he declined to elaborate further.

Tom Green, a senior assistant attorney general who heads California's antitrust division, would neither confirm nor deny that the state's investigation is underway, a practice he said is routine for the office.

Meanwhile, Massachusetts investigators began contacting Microsoft?s customers as far back as last May.

Although a spokeswoman for the Massachusetts attorney general's office said it does not "confirm or deny any investigations," Compaq last May told CNET?s NEWS.COM that it had been contacted by the Massachusetts agency, which was seeking information related to antitrust issues.

Mark Murray, a Microsoft spokesman, said the six state agencies investigating Microsoft exceeded the number that he had heard were checking into the company.

"This list is much longer than the states who have contacted us or we are aware of," Murray said.

Murray said the software giant is confident it will not receive any action against it.

"We're completely confident that once they look at the facts that they'll see we're conducting our business in a completely lawful manner and that Microsoft does not compete unfairly," he said. "The facts will speak for themselves."

Consumers groups, meanwhile, also are stepping up the heat on the software giant.

Consumer advocate Ralph Nader, who previously has denounced what he labeled Microsoft's "intimidating tactics," said he will convene a conference in November that will discuss the company's monopolistic practices. Participants at the two-day conference will include Sun Microsystems chief executive Scott McNealy, Netscape Communications general counsel Roberta Katz, and former federal trade commissioner Christine Varney. Nader said he has outstanding invitations to Microsoft CEO Bill Gates and Vice President Al Gore.

Microsoft's Murray said Nader is acting on behalf of Microsoft's competitors, noting that the list of participants who will speak at the conference represent some of the software giant's largest competitors or opponents.

Meanwhile, the Washington-based Consumer Project on Technology, a consumer watchdog group affiliated with Ralph Nader, is circulating a letter to be sent to assistant attorney general Joel Klein at the Justice Department. The organization wants the Justice Department to investigate claims regarding Microsoft's predatory pricing and its plans to bundle Internet Explorer 4.0 with Windows 98.

James Love, executive director of the Consumer Project on Technology, said he was encouraged by the news of the investigations.

"People are rather jaded about the prospects of the Department of Justice" investigating Microsoft, he said, referring to several inquiries the agency has made over the years. "People are excited about this."

But two attorneys specializing in antitrust law cautioned against making too much of the actions of the attorneys general.

"The most we can read into it is that, as they should, these state offices are concerned about the possibility of Microsoft misusing its monopoly power," said Gray. "There's a school of thought that says that, when you're a monopoly like Microsoft, you should always have an ongoing investigation on you to keep you honest."

Bob Lande, a professor specializing in antitrust issues at the University of Baltimore School of Law, questioned whether the states probing Microsoft will have the resources to go after a billion-dollar company.

"If anything, [states] are more aggressive than the federal government," Lande said. But, he added, "in order for the states to sue Microsoft on a major matter like this, it would be an incredible commitment."

Lande explained that most monopolization lawsuits last an average of 8 years and that there are only about 100 full-time state attorneys devoted to antitrust issues.