Did Microsoft Foes Craft Antitrust Penalties?

WASHINGTON--An antitrust expert testifying for Microsoft on Wednesday said the remedies sought by the holdout states are nothing more than a wish list assembled by the software giant's competitors.

Many of the provisions of the nonsettling states' proposal "would have the effect of protecting or boosting the fortunes of competitors," said Kenneth Elzinga, an economics professor at the University of Virginia and former antitrust advisor at the U.S. Department of Justice. He said the remedies would ultimately hurt competition and cost Microsoft hundreds of millions of dollars.

These competitors, wrote Elzinga in prepared testimony for the remedy phase of the Microsoft antitrust case, "seek to regulate Microsoft and secure zero-priced use of intellectual property."

Wrapping Up

Elzinga, Microsoft's next to last witness, took the witness stand late Wednesday morning. His testimony was an effort to convince Judge Colleen Kollar-Kotelly that the remedies sought by the nine nonsettling states would do nothing to help consumers. Among their requests: forcing Microsoft to produce a stripped-down version of Windows, force the porting of Office to other operating systems, and make Internet Explorer open source.

In particular, Elzinga said the proposal requiring Microsoft to auction licenses of Office so rivals could port it other operating systems, such as Linux, would hurt consumers. Under this plan, Sun Microsystems "might abandon StarOffice and focus on developing its own clone of Microsoft Office." Elzinga said. StarOffice is an office productivity suite that Sun plans to begin charging for by the end of June.

Elzinga will be followed by Microsoft's last witness in the case, John K. Bennett, a computing science professor at the University of Colorado. Testimony is expected to wrap up Friday.

The U.S. Court of Appeals last year upheld a lower court ruling that Microsoft had illegally maintained its monopoly in operating systems. The Bush administration, and nine of the 18 states in this case, reached an out-of-court settlement that is also being considered by Kollar-Kotelly.

Nine other states--Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia--as well as the District of Columbia are seeking tougher remedies.

Rebuttal Allowed

In a significant concession to the states, Kollar-Kotelly yesterday allowed them to bring in two rebuttal witnesses: James Bach, a software consultant, and Andrew Appell, a computing science professor at Princeton University. Appell testified earlier, but this is Bach's first appearance in the case.

Their testimony is intended to challenge Microsoft Chairman Bill Gates' argument that many of features of Windows can't be removed without seriously hurting the operating system. Gates said he would have to withdraw Windows from the market if forced to produce a stripped down version.

In his testimony, Elzinga said that even if the unbundling were technically feasible, "complying with it would impose large costs on Microsoft." He said the level of developer effort to produce such a version of Windows would be as great as the development of a new version of the Windows operating system.