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Tuesday, May 7, 2002 - Page updated at 12:00 AM

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Judge in Microsoft case shows interest in penalty proposal

The Associated Press

WASHINGTON — The federal judge hearing the Microsoft antitrust case gave new hope to states suing the company when she agreed today to let them present more information on their most controversial penalty proposal.

The nine states want Microsoft to release a version of its Windows operating system that will permit computer manufacturers to replace Microsoft features with competing products.

Lawyers for the states asked U.S. District Judge Colleen Kollar-Kotelly to allow them to call an extra witness to show that the "modular" Windows is feasible, despite Microsoft’s objections.

The states finished their case in April, and Kollar-Kotelly was reluctant to let the states add on another witness. She called the request an ill-conceived "tactical decision."

Nevertheless, she decided to hear the witness, independent software tester James Bach of Front Royal, Va.

"I think that the information should be submitted to the court, that I should have it," Kollar-Kotelly said.

States’ lawyer Steven Kuney said Bach will argue that Microsoft’s XP Embedded operating system shows that Microsoft can make a modular version of Windows. XP Embedded is designed for small, limited function devices like cash registers and automatic teller machines.

Many Microsoft witnesses, including Chairman Bill Gates, say that Microsoft is unable to make a modular Windows because the different features — like the Internet browser and media player — are dependent on each other.

Microsoft earlier specifically targeted the penalty proposal in a motion that asked the judge to dismiss it. She has not ruled on the request.

Bach’s testimony, which includes a video, will come after Microsoft rests its case next week.

Top Microsoft executive Jim Allchin testified today that hackers, virus writers and software pirates could run rampant if Microsoft disclosed technical information as requested by the states.

Allchin, who oversees Windows, said such disclosures "would make it easier for hackers to break into computer networks, for malicious individuals or organizations to spread destructive computer viruses and for unethical people to pirate" Microsoft’s flagship software.

The states want the disclosures so competitors can make their software work as well with Windows as Microsoft’s own products. The overwhelming market share of Windows gives Microsoft a leg up on other software makers, they say.

A lawyer for the states, Kevin Hodges, pointed out that many of the most destructive computer attacks in recent years have targeted Microsoft products regardless of whether Microsoft disclosed particular technical data.

"I guess it’s a matter of how hard you make it," Allchin replied. "We have to work on our reputation for security in the marketplace."

The federal antitrust settlement with Microsoft exempts the company from disclosing information that may compromise security. The states’ proposals have no such exemption.

Critics say Microsoft could use that exemption to keep from having to disclose a much broader swath of information for competitive gain.

Hodges pointed to an interview with Roger Needham, the head of Microsoft’s research laboratory in England, who said that the exemption is only meant to protect specific cryptographic keys.

Allchin said he disagrees with Needham. Needham was named as a possible Microsoft witness, but was removed from the list last week.

Allchin confined his testimony to just a few issues, frustrating lawyers for the states who could not introduce other matters because of cross-examination rules. They wanted to raise several internal Microsoft memos related to Microsoft’s alleged wrongdoing.

Allchin is the last Microsoft official scheduled to testify in the eight-week-old case. Two experts, an economist and a computer scientist are still remaining in Microsoft’s defense.

The original judge in the antitrust case ordered Microsoft broken into two companies after concluding that it illegally stifled competitors. An appeals court upheld many of the violations but reversed the breakup order and appointed Kollar-Kotelly to determine a new punishment.

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.

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