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Saturday, February 16, 2002 - Page updated at 12:00 AM

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Justice identifies 'major' complaints with Microsoft settlement deal

Seattle Times business reporter

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When the government asked the public what it thinks about the Microsoft antitrust-case settlement, two of the most condemning responses came from Microsoft's back yard.

A Kirkland programmer and Seattle-based RealNetworks filed two of the 47 public comments deemed "major" and substantive by the U.S. Department of Justice and made public yesterday.

Only five of the 47 supported the settlement, a few criticized Microsoft for not disclosing political contacts that may have influenced the agreement, and the rest attacked it as an inadequate response to the illegal, monopolistic behavior courts found in the company's business practices.

Legal experts said the critiques may force Microsoft and the Justice Department to strengthen the settlement in order to get it approved by U.S. District Judge Colleen Kollar-Kotelly.

"If they want to demonstrate their credibility in front of the judge, I don't think they can just blow off that kind of substantial commentary," said Andy Gavil, an antitrust-law professor at Howard University in Washington, D.C.

The criticisms are among 15,000 comments from individuals, politicians, companies and trade groups opposing the agreement. They were filed when the Justice Department took public comments for two months ending Jan. 28. About 7,500 of them were supportive.

Forcing changes to the settlement is one goal of RealNetworks, the digital-media software company founded by ex-Microsoft executive Rob Glaser.

The company's filing said the settlement contains "major exceptions and loopholes that allow Microsoft to delay and avoid disclosing the technical information necessary" for competing software products to work with its dominant Windows operating system.

RealNetworks said Microsoft is continuing such behavior with the Windows XP operating system, introduced just last year, and has refused to disclose technical information used in XP's music features.

Ramon Pantin, a programmer from Kirkland who described himself as an expert in operating systems and a former Microsoft employee, filed a 42-page critique noting dozens of ambiguous terms that Microsoft could interpret to its advantage.

For instance, where the settlement states that Microsoft "shall not restrict by agreement" computer makers from loading and presenting competing software on their machines, Pantin suggested the wording be changed to "not restrict by agreement or any other means."

Pantin said Microsoft in the past retaliated against computer makers in ways other than agreements, such as excluding them from marketing programs or threatening them with audits.

Others submitting major comments included competitors such as Sun Microsystems, AOL Time Warner, Palm and Novell, trade groups for and against Microsoft, programmers and academics such as New York University economics professor Nicholas Economides.

Economides said it's a "good and fair settlement that achieves the objectives of remedial relief without damaging the software industry" and that "freezing Windows in its present form and functionality" would harm consumers.

Microsoft and the Justice Department have said they are considering changing the settlement in response to the comments. Yesterday they declined to comment until their formal response is filed, by Feb. 27.

"We look forward to the court's review of the settlement agreement," Microsoft spokesman Jim Desler said. "We believe it's in the public interest and has widespread support from consumers and the industry."

The comments were filed as part of a process mandated by the Tunney Act for reviewing antitrust settlements to be sure they are in the public's best interest. Kollar-Kotelly is scheduled to hold a public hearing on March 6 to gather more comment before deciding whether to approve, deny or modify the settlement.

Microsoft has been investigated by antitrust regulators for more than a decade but the current case began in 1998. It was largely settled in November when the Justice Department, nine states and the company agreed to the settlement, which forces Microsoft to provide more equal access to its software licenses and programming interfaces to other companies.

Nine other states, including California and Utah, declined to settle. They are seeking stricter remedies to restore competition to the software market, including a requirement that Microsoft offer a bare-bones version of Windows without ancillary programs such as an Internet browser and media player. A trial on their case begins the week of March 11.

Gavil and other antitrust experts said the judge could offer to approve the settlement on the condition that Microsoft and the Justice Department make some changes to address the public concerns.

Microsoft may agree to strengthen the settlement if the nine states drop their case and sign on to the settlement, said Ernest Gellhorn, an antitrust law professor at George Mason School of Law in Arlington, Va.

All the public comments on the settlement will be made available on the Internet and on computer disks after Feb. 27.

Reuters reported last night that, in a conference call with attorneys from both sides, Kollar-Kotelly told Microsoft it would have to supply the computer code for its Windows program to the states seeking stiffer antitrust sanctions.

The states want experts to analyze whether the code for the Internet Explorer browser can be removed without disabling the operating system, an issue that has persisted through the case.

“It seems to me that if your side has access to it, then the other side, frankly, should have access to it,” the judge reportedly said.

Microsoft said the states asked for the code after a deadline for such requests in December.

Brier Dudley can be reached at 206-515-5687 or bdudley@seattletimes.com.

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