The Pew Charitable Trusts

Alternately cocky and cautious, three of the 19 state attorneys general who joined the U.S. Department of Justice in successfully filing antitrust claims against Microsoft Corp. discussed a federal judge's ruling in the case Monday.

The attorneys general of California, New York and Iowa downplayed reports that friction between the states and Justice led a federal mediator to scrap settlement talks last week. They refrained from speculating what penalties Microsoft will likely encounter.

Hours after federal Judge Thomas Penfield Jackson held that Microsoft kept "an oppressive thumb on the scale of competitive fortune," California Attorney General Bill Lockyer, New York's Eliott Spitzer and Iowa's Tom Miller participated in a media teleconference.

"The thoughtfulness and strength of Jackson's decision puts Microsoft in a bind," Spitzer said. "Although they are trying to spin it to the contrary, they are left with a very remote chance of success on appeal. Microsoft, I think right now, is wishing they had resolved this last week on the terms that were proposed by the states and the Department of Justice."

Pressed to reveal those terms, Spitzer and his colleagues said they were bound by a confidentiality agreement forbidding comment about their negotiations with federal mediator Richard Posner. After it was apparent the talks were going nowhere, Jackson on Monday ruled that Microsoft had broken antitrust law.

"We feel that we've been vindicated today," said Miller, who spearheaded the states' legal efforts. "The decision by Judge Jackson is broad, conclusive and compelling. Consumers are inherently better off in a competitive situation than a monopoly situation. This is an important day for us -- one that we worked hard to achieve."

In a conclusion of law delivered by Jackson, he declared that Microsoft was guilty on three of four counts accusing the company of violating the Sherman Antitrust Act. The Washington-based software giant strove to monopolize the PC operating system software market and the Web-browser industry, and "quashed innovation" by tying its Internet Explorer browser to the company's Windows operating system, Jackson ruled.

California, New York and Iowa were joined by Connecticut, Florida, Illinois, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, North Dakota, New Mexico, Ohio, Utah, West Virginia, Wisconsin and the District of Columbia in filing antitrust claims against Microsoft. South Carolina had been a party, but dropped out, citing a change of heart.

"There has been, in fact and in law, a monopoly that Microsoft used to stifle innovation and increase the costs of products," California Attorney General Bill Lockyer said. "The fact that this lawsuit has been aggressively pursued will help to stop that practice."

After observing that every PC user "will benefit from breaking up a monopoly," Lockyer quickly added he was not suggesting that Microsoft be broken apart. That's a possible remedy that could come down by the summer, and the harshest of a range of punishments Microsoft may face.

Monetary damages is another possibility, although Miller said money is not a major concern to the 19 states in the Microsoft suit.

"Since they (Microsoft) have been found to violate the states' antitrust laws, they're liable for civil penalties under the states' laws, and that's something we will pursue," Iowa's attorney general said. "But it's a very minor part of the case. The whole thrust of the case has not been about money, but about conduct and about competition and about consumers."

Judge Jackson surprised both sides by ruling in Microsoft's favor regarding a charge that the firm acted to block a rival Web browser company, Netscape, from distributing its product.

However, California's Lockyer even found a silver lining in that decision.

"It's my understanding that the judge agreed with 24 or 25 claims that we urged on the court," Lockyer gloated. "That's a pretty good batting average."

Microsoft has steadfastly denied any wrongdoing and a lengthy legal appeal by the software manufacturer appears a foregone conclusion. However, New York's Spitzer strongly hinted that might be a waste of time.

"The number of theories and the varied theories that Judge Jackson has articulated for their liability means they need a clean sweep in the D.C. (federal appeals courts) and the Supreme Court to eliminate their liability -- and I don't think anybody would want to bank on that," Spitzer said.

After mediation talks disintegrated April 1, the mediator -- a federal judge -- released a statement that seemed to allude to differences between the states and the Justice Department. Miller acknowledged the sides had encountered bumps in the road, but minimized them.

"The states and the federal government have been in general agreement on just about every aspect of the case," Iowa's attorney general said. "Occasionally, there are some differences of opinion, and we sort of work through those in a very creative way, and a healthy way."

When the subject turned to remedies for punishing Microsoft, Spitzer, Lockyer and Miller returned to the tight-lipped stance they've taken since the suit was filed 23 months ago.

"The question of remedies we want to have within the family," Miller said. "Within our AG family and with our brothers and sisters at the Department of Justice. And when we've resolved that, we'll make sure they're known to everybody."

Thursday: Attorneys General from some of the 31 states that didn't participate in the Microsoft antitrust action talk about why they didn't, as well as their reactions to the Judge Jackson's ruling.