States, Microsoft Face Off in First Day of Hearings

Precedent-setting hearings to determine whether Microsoft will face stricter antitrust remedies than those imposed by the company's proposed settlement with the US government kicked off yesterday in a Washington, DC, federal courthouse. Squaring off against the software giant are nine US states--California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah, and West Virginia--and the District of Columbia, which argued in court yesterday that Microsoft is still a bully, "like a heavy in a grade B movie." For its part, Microsoft says the more draconian measures the states have requested would help only its competitors, not consumers.

The nonsettling states opened the hearings with a series of email messages from Microsoft executives such as Chairman and Chief Software Architect Bill Gates and CEO Steve Ballmer, who pressured Dell--the largest PC maker in the world--to drop its desktop Linux products in mid-2000. "It's untenable for our 'Premier Partner' on Windows 2000 to be doing aggressive market development for another operating system," reads an internal document Ballmer used for notes when he spoke to Dell executives. Dell responded by quietly dropping support for desktop Linux, firing the person in charge of the support, and reassigning the rest of the team. Lawyers for the nonsettling states say that this behavior shows Microsoft is still acting like a predator since the court found it guilty of breaking US antitrust laws. "\[This action\] shows a pattern of conduct," the states' attorney Steven Kuney said.

The states demonstrated other examples of Microsoft's recent predatory behavior. Windows XP cripples digital-media software from rival RealNetworks by quietly disabling its CD-burning capabilities, Kuney said. He promised to reveal other examples throughout the hearings.

Curiously, Microsoft's main argument yesterday was that the states' remedies would require the company to produce "4096 mutant versions of Windows," despite the fact that the states clarified their request weeks ago, making it clear that they're asking for only one modular Windows version. The company believes this request would hurt consumers and software developers and cripple the product so thoroughly that Microsoft would be forced to withdraw Windows from the market.

Responding to a remedial request that Microsoft be forced to open up the code of its Internet Explorer (IE) Web browser, Microsoft attorney Dan Webb said that such an act would be, in effect, a confiscation of the company's intellectual property, which cost Microsoft billions of dollars to develop. And although you might logically wonder why Microsoft then gives away for free such an expensive product, the states' response was straightforward. "Internet Explorer, your honor, is the fruit of Microsoft's statutory violations, and it should be denied to them," said Brendan Sullivan, an attorney for the nonsettling states.

After the opening statements, Microsoft attorneys briefly questioned Sun Microsystems Vice President and General Manager Richard Green, who discussed the Java technology and the recent lawsuit Sun launched against Microsoft. Microsoft attorney Steven Holley produced an email from Sun CEO Scott McNealy that proposed an anti-Microsoft alliance with AOL Time Warner. "Does AOL have a plan to counter \[Microsoft\] .NET?" the McNealy email message asks of an unnamed AOL Time Warner executive. McNealy suggested that Sun's Java could help AOL "leapfrog" .NET.

The hearings will probably last for as long as 2 months, and will likely include appearances by high-profile Microsoft executives, including Gates and Ballmer.

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