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Tuesday March 5, 9:55 PM

Microsoft gears up for crucial legal battles on antitrust settlement

Microsoft is gearing up for the start of court proceedings that will be critical to the software giant's future and its ability to conclude its four-year-old antitrust battle.


On Wednesday, the company and the Justice Department will argue in court for a judge to approve the settlement signed in November that took the federal government and nine states out of the antitrust case.

Judge Colleen Kollar-Kotelly must rule on whether the settlement -- in which Microsoft agrees to make some changes in business practices -- is "in the public interest," a definition that has been hotly contested.

Meanwhile, in what has become a separate case, nine other states along with the District of Columbia will ask the same judge at a trial beginning Monday to impose stiffer remedies to punish the firm for its monopoly abuse.

"It's very important for Microsoft to have this finally behind them," said Nicholas Economides, a New York University economist who has been following the case.

Justice Department officials said they will argue that their settlement -- which requires that Microsoft treat computer makers on an equal basis and not punish vendors for using competing software -- should go forward regardless of what happens in the second case.

But if the states prevail in seeking a tougher remedy, it may imperil the settlement.

Economides said that because the two separate tracks of the case are now separate, it might be possible to have two different, and possibly conflicting outcomes.

"There is a possibility, although remote, of two different outcomes, if significant new evidence shows up in the remedies trial of the nine states," he said. "I believe it's remote, but it's possible."

Microsoft is arguing said it would have to pull Windows XP off the market and be unable to develop new systems if tougher antitrust sanctions are granted.

In a deposition filed in the case, Microsoft chief executive Steve Ballmer said the task of "unbundling" Windows would not be feasible and would ending up harming the system and creating confusion among users.

"I don't think you can build this system," he said. "If you pull the piece out, the only way you're going to get it to run is to have another piece that works exactly like it, and this is for an infinite number of pieces."

Having various versions of Windows, said Ballmer, "destroys the value to the consumer of Windows, because no longer can the consumer depend on it to do anything, and ... it destroys any notion we have of an economic return on the investment we put into Windows."

Connecticut Attorney General Richard Blumenthal, who represents one of the states still pursuing the case, accused Microsoft of using "overblown rhetoric and apocalyptic predictions" aimed at averting tougher sanctions.


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