Microsoft 'could Be Destroyed' If Curbs Are Imposed

Microsoft will face corporate oblivion if radical plans to curb its abuse of monopoly power are approved, lawyers for the software group told a US federal judge yesterday.

Dan Webb, the company's attorney, described the latest proposals from Microsoft critics as "extraordinarily harsh and unfair". He claimed that, if enforced, the proposals "would destroy Microsoft".

Mr Webb was speaking on the first day of a remedy hearing sought by nine states opposed to a deal negotiated with the US justice department last autumn.

The states argued that the settlement was not sufficiently strong to prevent Microsoft from unfairly using its size to gain a competitive advantage in technologies that have emerged since the antitrust proceedings began, almost four years ago.

Technologies that may fall outside the settlement include media players, handheld devices and set-top box software.

The dissenting states are proposing that Microsoft repackage its Windows offering - which occupies more than 90% of the market share - into individual "modules". PC makers would then be free to chose whether to include features such as an internet browser or a spreadsheet program in their machines.

Mr Webb said: "If the states' remedies are adopted, Microsoft would have to withdraw Windows, billions of dollars of intellectual property would be unfairly confiscated, and the ability of Microsoft to develop new products would be severely damaged, to the detriment of consumers."

This argument was vigorously opposed by the dissenting states. They argued any deal must take account of changing technologies and new opportunities for monopoly abuse.

"There's a remarkable similarity between the conduct in the record, the conduct being employed today and what will be available to Microsoft in the future," said Brendan Sullivan, an attorney for the nine states that have not settled. "Microsoft has a strategic plan to protect the barriers to entry ... [and has] used extreme measures to protect its monopoly."

Lawyers for Microsoft asked Judge Colleen Kollar-Kotelly to ensure any settlement is confined solely to those technologies considered in the long-running trial. Another nine states have signed up to such a limited settlement.

The autumn settlement came after some of the antitrust charges against Microsoft were thrown out by a federal appeals court in the summer. But a judgment that the software firm had illegally maintained its Windows software monopoly in PC operating systems was upheld.

The antitrust remedy hearing, which began yesterday, is likely to last five weeks and see Microsoft founder Bill Gates appearing in the witness box.

In a separate hearing, Judge Kollar-Kotelly is considering whether the settlement negotiated with the justice department is in the public interest.