States attack as Feds let Microsoft off the hook

Last week's shock decision by the US Department of Justice (DoJ) to can the antitrust case against Microsoft has angered a number of state attorneys general, who have been battling the software giant side-by-side with the DoJ.

Both Californian Attorney General Bill Lockyer and Elliot Spitzer from New York said that they might pursue their own sanctions if the DoJ gives Microsoft an easy ride. The duo said on Friday that they would "press for remedies that go beyond those requested by the DoJ " if necessary.

Lockyer and Spitzer said that they agreed with the decision not to pursue the break-up of Microsoft but added that they are concerned that the DoJ now says it will no longer press the claim that Microsoft illegally tied its Internet Explorer browser to Windows.

The DoJ decision opens the way for Microsoft to bundle any product it wants with Windows. With the upcoming Windows XP launch, Microsoft is not only integrating IE, but also software for ecommerce, digital music, internet telephony and digital photography.

The DoJ said it would not stop Microsoft shipping Windows XP but Spitzer and Lockyer said in their joint statement: "It is imperative Microsoft not have another opportunity to use Windows XP to suppress competition in emerging internet areas."

There is a political angle to the threats from the attorneys general. Both Lockyer and Spitzer are Democrats and the DoJ is now run by Republicans, who historically are more in favour of big business.

Recognising this, Microsoft has been using its money to influence Republicans. Two-thirds of the $4.66m in political donations Microsoft and its employees made before last year's election went to Republicans, according to the Center for Responsive Politics, which tracks such matters.

The company even hired Rex Reed, a senior advisor to then candidate George Bush, as a lobbyist to press its case.

The remedies the states and the DoJ want are unclear but the prosecutors are scheduled to issue guidelines to new judge Colleen Kollar-Kotelly by next Friday.

Almost certain to be on the list is to end Microsoft's practice of making PC makers pay for Windows on each PC they ship, whether they include the operating system or not. Ending that practice could stimulate competition, said prosecutors.