Microsoft Says No to Compromise

Microsoft (Nasdaq: MSFT) refused to compromise further with the nine states pursuing antitrust action against the software giant -- just a day after U.S. Judge Colleen Kollar-Kotelly asked Microsoft and the states to find common ground.

The states told the court that the most critical requirement in their suit is that Microsoft agree to share its source code, allowing competitors to develop products that are fully compatible with Windows.

That would make Microsoft "more like a company facing competition and less like a firm existing in a comfortable monopoly," states' attorney Steve Kuney told the court.

As it stands now, he said, Microsoft believes it knows "better than anyone else what's best for this PC ecosystem. What's good for Microsoft is therefore good for the economy, good for consumers and good for everybody else."

Digital Divide

But there are still wide gaps between the two parties' plans. And Microsoft has chosen to take its chances with Kollar-Kotelly's eventual decision.

Microsoft attorney John Warden said the situation could not be remedied "by changing a few words here and there. We can't fix it."

Kollar-Kotelly had asked the two sides to work on their proposals, ordering them to appear before the court prepared to compromise. But Microsoft thumbed its nose at the suggestion.

No Apologies

This is just the latest volley in the months-long antitrust trial, which has revealed a Microsoft that most observers contend is angry, victimized and arrogant, but never contrite.

The U.S. Department of Justice settled its antitrust case with Microsoft months ago, but the nine states rejected it, saying that Microsoft deserved stiffer penalties for what the states characterized as the company's "thuggish" behavior.

The trial became heated at times, with Microsoft bringing out such witnesses as University of Colorado computer science professor John Bennett, who said that while a modular version of Windows is feasible, it would impose additional testing burdens and developmental costs on the Redmond, Washington-based software maker.

Opponents Speak

Executives of other companies -- including RealNetworks (Nasdaq: RNWK) and Novell -- testified that Microsoft had thwarted competition with questionable business practices, including withholding crucial pieces of software code.

Internal correspondence among Microsoft executives, including chairman Bill Gates, indicated a take-no-prisoners stance toward competitors.

The states have remained doubtful that Microsoft will change its business practices.

"I suggest to you that Microsoft still doesn't get it and you're the only one left to tell them what it's all about," states' attorney Brendan Sullivan said to Kollar-Kotelly in closing arguments.

Beyond Affirmation

But Warden took issue with Sullivan's characterization, saying, "We haven't failed to get some message. We haven't claimed that we're immune from the law or anything of that kind."

Kollar-Kotelly has played her own cards close to the vest, only hinting here and there about how the case might play out.

Analysts said they expect the states will not get exactly what they want.

"I don't believe the states will get Windows chopped up the way they have suggested," Peter Kastner, chief research officer at the Aberdeen Group, told the E-Commerce Times.

"But I do believe the judge will [do more than] simply reaffirm the agreement the Justice Department and Microsoft reached last November," he added.