Microsoft Corp should forfeit its Internet Explorer because the success of the Web browser is the "ill-gotten gain" of the company's illegal campaign to protect its Windows operating system monopoly, nine states told a US judge.
The states, led by California, Iowa and Connecticut, have condemned as inadequate Microsoft's proposed settlement of the four-year-old antitrust case with the US Justice Department.
The Bush administration inherited the case from the Clinton administration and settled it after an appeals court overturned a judge's break-up ruling and ordered new remedies.
Microsoft should be forced to place the Internet Explorer software code in the public domain, said Washington lawyer Brendan Sullivan Jr. at the opening of what may be two months of court hearings. He said the company used the dominance of Windows, which runs 95 percent of the world's personal computers, to crush rival browser Netscape Navigator, now owned by AOL Time Warner Inc.
"Internet Explorer is the fruit of Microsoft's statutory violation," Sullivan told US District Judge Colleen Kollar-Kotelly. "It was at the heart of Microsoft's strategy to maintain its monopoly. This is the ill-gotten gain."
Dan Webb, Microsoft's lawyer, offered a rebuttal.
The states' proposals would "confiscate billions of dollars of Microsoft's intellectual property," force Windows from the marketplace and leave Microsoft's competitors "the only beneficiaries," he said.
A federal appeals court upheld findings last year that Microsoft coerced computer makers and Internet service providers not to promote Navigator because it feared the rival browser was a threat to the Windows monopoly. Microsoft has argued that the browser was inseparable from Windows without damaging the operating software.
About 90 percent of the people browsing the Web at any given time use Internet Explorer, estimates WebSideStory Inc, a research company. AOL has said the gap isn't that large.
Sullivan said the proposed settlement, also being reviewed by the judge, is inadequate. It is "so full of exceptions no one will ever know if it will unfetter the market," he said.
Giving software developers access to the browser code would allow competitors to develop rival products, he said.
Microsoft's shares dropped US$0.69 to US$61.81 in early afternoon trading.
The settlement requires Microsoft to give computer makers the freedom to promote Navigator and other software that competes against Microsoft products without fear of retaliation. Microsoft is also required to give computer programmers access to the code needed for their products to run on Windows.
Sullivan said a court decree should do more to prevent the recurrence of Microsoft's illegal conduct.
"Microsoft has done much good but it has also acted very, very badly," Sullivan said.
"Microsoft must be made to understand their role in our society" and engage in "proper corporate conduct."
Under the states' plan, Microsoft would be forced to devise a "modular" version of Windows so that computer makers could easily extract programs they wish to remove and replace with competing software.
The settlement would only require Microsoft to hide user access to Internet Explorer and other programs, such as the Windows Media Player.
Sullivan derided what he called Microsoft's ``doomsday defense'' to the restrictions proposed by the nine states. In Microsoft's rendition, ``the computer industry would be driven back to the `70s'' by the states' plan, he said.