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11 states subpoena Microsoft

Antitrust investigations into the software giant heat up as 11 states demand documents related to the Windows 98 operating system.

New York state attorney general Dennis Vacco announced today that he and ten other state prosecutors have subpoenaed Microsoft for documents relating to its upcoming release of Windows 98.

Investigators declined to give many details of their probe, except to say that it was extensive and concerned the bundling of Microsoft's Internet Explorer with Windows 98, the successor to its Windows 95 operating system.

"We're looking at anything and everything that may involve improper use by Microsoft of its dominant market position in Windows in relation to the browser product," Connecticut's attorney general, Richard Blumenthal, told CNET's NEWS.COM. "We're looking for technical data and marketing information relating to Windows 98...essentially information we think is necessary to assess what action may be appropriate."

The issuance of the 11 identical subpoenas comes as no real surprise. In December, representatives from at least nine attorney general offices met in Chicago to discuss Microsoft's business practices and the likelihood of pooling state resources to enforce antitrust laws. In addition to New York and Connecticut, those states included California, Florida, Illinois, Massachusetts, Minnesota, Oregon, and Texas.

The identities of some of the "10 other states" referred to in Vacco's announcement was unclear. According to a person familiar with the investigation, however, the list included those nine states above, as well as South Carolina and Wisconsin.

The federal government is fighting Microsoft in court over terms of a 1995 antitrust settlement. See special coverage: Microsoft case keeps growing The Justice Department alleged in October that a requirement that computer vendors install Microsoft's Internet Explorer as a condition of licensing Windows 95 violated a consent decree the two parties signed to settle an earlier enforcement action. The government says it is also investigating a number of Microsoft's other marketing practices--possibly including Windows 98, expected to ship in the second half of this year.

A Microsoft spokesman said that it has been in regular contact with the states and that the subpoenas are not unexpected. "When it became clear that the states wanted more info, Microsoft actually suggested that they issue these subpoenas because that provides the greatest protection for our confidential information," said Microsoft's Mark Murray. "We're confident that once they've reviewed all the facts, they'll agree that Microsoft is completely within the laws," he continued, adding that Microsoft was fully cooperating with the states' investigation.

But Connecticut's head prosecutor disputed Murray's claim. "In most instances, when we do this kind of investigation there is voluntary cooperation without the need for subpoenas," said Blumenthal. "Certainly, the fact of the subpoenas speaks for itself in indicating a lack of cooperation and indeed potential stonewalling." He added that his office will take court action against Microsoft if it doesn't comply with the subpoenas by February 23.

Blumenthal also said that his office and the other states investigating Microsoft consult with each other "at least once, maybe twice a week," mostly via conference calls.

In addition to the state and federal probes, the Senate Judiciary Committee is studying competition in the software industry with a special emphasis on Microsoft. Other regulatory agencies--including competition enforcers from Japan and the European Union--are also looking into the company.