States Seek New Microsoft Sanctions

WASHINGTON – Nine states argued Friday for sweeping penalties against Microsoft, among them a stripped-down version of its Windows operating system and Office software that would work with competing operating systems.

The 40-page document filed Friday by attorneys general yet to settle with Microsoft is far tougher than the settlement already reached by the federal government to settle the historic antitrust case.

In a subtle jab at the Justice Department, the states wrote that the changes would make a "meaningful remedy'' and avoid ``carefully crafted carve-outs'' that Microsoft could use to shirk the agreement.

The states also argue for tougher enforcement provisions, including a court-appointed "special master'' to oversee Microsoft's compliance.

"This remedies request offers a powerful, compelling blueprint for reform and restoring competition and for stopping Microsoft's misuse of its monopoly power,'' said Richard Blumenthal, Connecticut's attorney general.

Microsoft is due to respond to the states' request next week, in a filing with U.S. District Court Judge Colleen Kollar-Kotelly, who allowed the states to pursue their lawsuit after the Justice Department and nine other states settled.

Microsoft spokesman Jim Desler said proposed penalties ``are extreme and not commensurate with what is left of the case.''

Several Microsoft competitors get benefits from the states' proposal.

"It's not fair to other businesses, and it's not fair to consumers to have one large company break the law for their commercial advantage,'' said California attorney general Bill Lockyer.

AOL Time Warner general counsel Paul Cappuccio praised the proposed remedies.

"It addresses the most important issues that the proposed settlement agreement between Microsoft and the Department of Justice ignored, and closes the most egregious loopholes that make that settlement ineffective,'' Cappuccio said.

Microsoft has argued that its rivals are fueling discontent with the government's settlement for their own gain, and influencing the states.

"That is totally false,'' said Tom Miller, Iowa's top lawyer. "We have not impugned the motives of Microsoft in a similar way, and we would ask them to act the same way.''

The Office suite, which contains Microsoft Word, Excel and other programs, is essential for many businesses. Microsoft currently makes the software for Apple's Macintosh computers, and the states want Microsoft to end its past practice of threatening to end its Apple version.

The states say Microsoft should license Office to other firms to make it compatible with at least three other operating systems.

Under the states' proposal, Microsoft would have to include Sun Microsystems' Java programming language in its Windows operating system. Microsoft stopped including Java in the newest version of Windows.

The states say Microsoft also must make public the blueprints - also known as source code - of the Internet Explorer Web browser. Microsoft president Steve Ballmer has called the "open source'' movement a ``virus'' that erodes intellectual property standards.

In the federal government's settlement, Microsoft agreed to let customers remove some portions of Windows, and to release source code of some portions of Windows to make it easier for competitors to write compatible software.

The states that haven't settled with Microsoft are California, Florida, Utah, Iowa, Connecticut, Minnesota, Kansas, West Virginia and Massachusetts. The District of Columbia is also suing Microsoft.

The states' case is scheduled to go to trial in March. Also in March, a federal judge will review the federal government's settlement to determine whether it is in the public interest.

Shares of Microsoft slipped 82 cents to close at $67.83 on the Nasdaq Stock Market.