11 States Readying Action Against Microsoft

Eleven states were preparing on Thursday to file antitrust charges against Microsoft this month, increasing pressure on the federal government to take action against the software giant.

S'ources close to the investigations said the states would bring the kind of broad, new charges against the Redmond, Wash., firm that the U.S. Justice Department has been investigating for months.

The sources said the states would accuse Microsoft of using its dominance over computer operating systems to extend its control to related areas, such as the Internet.

California, Connecticut, Florida, Illinois, Iowa, Massachusetts, Minnesota, New York, South Carolina, Texas and Wisconsin are on the case and others may join, a source said.

The federal investigation reaches a potentially critical point Friday when Justice Department antitrust chief Joel Klein and his staff attorneys meet with Microsoft.

Microsoft asked for the meeting to open a high-level dialogue with the Justice Department, sources said. Although staff attorneys in the department are ready to bring a new, broad case against Microsoft no decision has been made at the top levels.

The Justice Department hasnt determined what it is going to do yet so wait and see, Attorney General Janet Reno said at her weekly news conference. Reporters pressed her without success for a deadline, in light of the states readiness to take action. I wouldnt comment on a timetable, she said.

Mark Murray, a spokesman for Microsoft, said the company hopes and expects the states to remain open-minded, at least until all evidence is available to them.

We only received the initial request for documents from the states in February and we are still in the process of compiling and providing the thousands of pages that they have requested, Murray said.

The states could bring separate cases in state or federal courts but likely will file one case in one federal court.

They may bring the case before U.S. District Judge Thomas Penfield Jackson, who is considering narrow Justice Department allegations that Microsoft violated a 1995 consent decree.

Charles Rule, who served as antitrust chief during the Administration of former President Ronald Reagan, said the states lack the resources to take such major action. Theyve never brought a case like this that will require the resources and focus of a broad, new case against a major company, said Rule, who has been retained by Microsoft as a consultant.

Rule, who is not directly participating on Microsofts behalf in the case before the Justice Department, predicted the federal or state governments would lose any broad, new case.

Wisconsin State Assistant Attorney General Kevin OConnor, who coordinates antitrust efforts among the states, refused to comment on the Microsoft case but bristled at Rules views.

The states can put together a very effective multi-state effort and have done so in the past, including cases where the federal agencies did not proceed, OConnor said. He said several antitrust cases were won by states alone in the 1980s, when the antitrust division under then-President Reagan would not act. I dont know if it was on Rick Rules watch or not, OConnor added.