Judge Wants Microsoft, States to Change Penalty Plans

WASHINGTON – The federal judge hearing the Microsoft antitrust case wants lawyers for Microsoft (MSFT)and nine states to focus on modifying competing penalty proposals rather than argue about their differences.

"Prioritize the various provisions in your own remedy proposal, indicating which provisions are integral to the proposal's effectiveness and which are less significant," U.S. District Judge Colleen Kollar-Kotelly told both sides in an order Tuesday.

The judge cautioned that the ordion. The Justice Department reached a settlement with Microsoft last year, but nine states are still seeking stronger antitrust penalties.

The states say their ideas, which include making Microsoft give up most rights to its leading Internet Explorer Web browser and offer a modular version of the Windows operating system that could be modified by computer makers, are more likely to increase consumer choice and promote innovation.

Those states and Microsoft were to deliver closing arguments Wednesday in the four-year antitrust battle, capping two months of hearings that featured many of the nation's top technology executives.

During the hearings, lawyers for the states at times posed hypothetical questions based on changes in their proposed penalties. Kollar-Kotelly indicated in her order that she may want the states to make those changes.

Microsoft may have a harder job. She asked the company to consider portions of the states' proposals that "would prove least onerous to (Microsoft), yet remain effective as a remedy."

She also wants Microsoft to consider how the company could close loopholes in the federal settlement, a central criticism of the deal.

Any changes Microsoft makes would have to be agreed to by the Justice Department. The settlement has yet to be approved.

Also Tuesday, Microsoft announced that it will drop support for Sun Microsystems' flagship Java product by 2004. Microsoft cited Sun's opposition in the antitrust case, as well as Sun's private suits against Microsoft.

"The decision to remove Microsoft's Java implementation was made because of Sun's strategy of using the legal system to compete with Microsoft," Microsoft spokesman Jim Cullinan said in a statement.

Current versions of Windows XP do not include Java, though users can download it if they need to run programs written in the language. But Microsoft did say it would temporarily restore support for Java in the upcoming update to Windows XP, expected this fall.

Sun offered little praise for Microsoft's decision to carry Java for the time being, focusing on the 2004 deadline and Microsoft's decision to use its own incompatible version.

In a statement, Sun called the decision "a move calculated to coerce consumers and developers who prefer the Java platform to nonetheless abandon that platform simply because Microsoft has publicized its intentions to deny the Java platform's access to Microsoft's monopoly distribution channels."

Cullinan said the company will temporarily support Java "to minimize any potential disruption among our customers."

The battle over Microsoft's implementation of Java -- promoted for its ability to run programs regardless of what operating system it is installed on -- was a central part of the federal antitrust case as well as two civil suits brought by Sun against Microsoft. Microsoft was criticized for "polluting" the standard by equipping Windows with its own flavor of Java, which was incompatible with Sun's version.

Microsoft cited terms of a settlement with Sun in its decision to drop Java.

"The settlement agreement between the companies prevents Microsoft from making any changes -- including any security fixes -- to our Java implementation after Jan. 1, 2004," Cullinan said. "We will not put our customers or Windows at risk so you can anticipate that there will be no Java in Windows from that point forward."

States that rejected the government's settlement with Microsoft last fall and are pressing for tougher penalties are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia.