States would like to renew court oversight of Microsoft

States monitoring Microsoft's compliance with their 2001 landmark antitrust settlement probably will seek continued court supervision over the software company's business practices, say people familiar with the matter.

Two people, speaking on condition of anonymity, said the states are leaning toward asking for an extension at the next scheduled court proceeding April 22. The states could ask for an extension of up to three years, said one person. The court oversight is due to end Nov. 12.

The issue arose at a Jan. 28 court hearing when 17 states, led by California and New York, cited complaints from computer makers and software vendors over Microsoft marketing programs for Windows Vista, the latest version of the operating system that runs 95 percent of the world's personal computers.

The companies complained that Microsoft's marketing programs hurt their ability to develop or load rival add-on software in PCs, according to a transcript of the hearing. The court decree that settled the government lawsuit against the world's largest software company requires Microsoft to give computer makers such as Hewlett-Packard and Dell freedom to promote rival software on Windows-powered PCs.

"In the six-plus years that we've been enforcing the decree, this particular issue is one in which we've gotten the most number of complaints and heard the most anxiety about what Microsoft is doing," Stephen Houck, who represents the states, said at the hearing.

Houck told U.S. District Judge Colleen Kollar-Kotelly in Washington that the states are "thinking very hard about" asking her to extend the decree, according to the transcript.

A Microsoft spokesman who asked not to be identified said that, since the Jan. 28 court hearing, the company has ended the marketing programs that sparked complaints from computer makers.

In 2001, Microsoft settled the case brought by the Justice Department and 20 states after an appeals court upheld a trial judge's findings that Microsoft had illegally protected its Windows monopoly. In January 2008, Kollar-Kotelly extended the decree at the request of the states.

The Bush administration's Justice Department opposed the extension and bowed out of enforcing the provisions, with the exception of a requirement that Microsoft disclose links that allow rival server operating software to communicate with Windows.

Microsoft has since publicly disclosed the links, yet the judge and state antitrust enforcers continue to press for technical documentation of the code. Microsoft told the judge in a March 16 status report that it plans to deliver the last set of technical data June 30.

Microsoft's delay in providing that information prompted Kollar-Kotelly to grant the initial extension. At the time, she denied the states' request for a five-year extension — that would have continued court supervision through 2012 — while inviting them to renew the request later on.

The states have received complaints about marketing programs such as OEM Ready and Velocity that were designed to let computer makers load software without adding to the time it takes a PC to start, or boot up in computer-industry parlance.

"You can take the same laptop, oftentimes, and pre-configure it one way and you can get almost instantaneous boot, and fantastic battery life," Steve Ballmer, Microsoft's chief executive officer, told a meeting of financial analysts in July. "If you pre-configure it with software in another way you get long boots, and much less battery life."

Ballmer said computer makers don't "always follow our advice, and we certainly respect their right" to "preload any software they want to."

In December, at least six months after the states received the first complaints about the marketing initiatives, Microsoft announced that it wouldn't reduce or withhold discounts from computer makers for installing software that didn't pass OEM Ready certification tests.

At the Jan. 28 hearing, Microsoft's lawyer, Charles Rule, said that after receiving "feedback from the industry, as well as from regulators," the company will "try to refine the program to make sure that it accomplishes its objective" of "making PCs more attractive to consumers" without "unintended consequences."

Microsoft's response "did move things in a positive direction," Houck told the judge. Still, Houck said computer makers and software vendors "continue to have concerns about these programs."