States Ready Microsoft Antitrust Suits

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April 30, 1998 (11:15 AM EDT)

By Mo Krochmal, Andrew Craig and John Borland,

While the federal government plans its next round of legal actions against Microsoft, a group of state attorneys general say they are likely to file their own series of antitrust suits against the software maker soon.

"A decision is imminent, to be made within the next couple of weeks," said Connecticut Attorney General Richard Blumenthal. "An action is likely."

Blumenthal confirmed 13 attorneys general have now joined the state-level investigation of Microsoft's business practices. Although the officials are not commenting on the details of the investigations, published reports say the group wants to stall the release of Windows 98, scheduled to arrive on PC makers' doorsteps a few weeks from now.

"Our concern is that Microsoft is using its dominance in personal computer operating systems to leverage and tie the sale of other software products," Blumenthal said. "That kind of monopolistic practice, if it exists, severely restrains competition and harms consumers by depriving them of quality as well as innovation."

Officials in the California attorney general's office, which has been identified in several reports as a leader in the states' campaign, declined comment on the details of their investigation. "We have been conducting an investigation of Microsoft, and that is continuing," said Staci Turner, a spokeswoman for California Attorney General Dan Lungren. "We haven't put a timeline on the investigation."

Some analysts predict the state lawsuits will amount to little more than a stalling action. "The attempt to stop Windows 98 just seems like a focus on the wrong issues, and a campaign that will ultimately not be successful," said Frank Gens, vice president of Internet research at International Data in Framingham, Mass. "But I'd never rule out the government's ability to slow things down."

The government should remain focused on investigating Microsoft's business practices, Gens said, but added the market should decide whether Win 98 should include Internet Explorer. Allegations about Microsoft's business practices "have very little to do with Windows 98 itself," Gens said.

Computer resellers worried they will find themselves without Win 98 to propel sales in June, have started a letter-writing campaign asking the attorneys general not to stall the operating system's release.

Turner said those letters are unlikely to derail any action, however. "This is not a public relations campaign. This is a serious investigation," she said.

As elected officials, many in technology-rich states, the decisions of the attorneys general will be influenced by the year's political dynamics, as well as operating system details.

Lungren, a Republican, is in the midst of a campaign for governor of California. Silicon Valley money from companies such as Netscape and Sun, both Microsoft enemies, will likely play a large role in the campaign. Several of the other attorneys general involved are also running for re-election or higher office this year.

But Blumenthal said any decision to file would be made on economic rather than political grounds, and needs to be a joint effort. "Information technology and personal computers and the industry as a whole are critical across the country," he said. "Economically, it spans the nation in its impact on consumers. No single state has sole concern or sole harm from this."