by Liza Porteus, Technology Daily
© National Journal Group Inc.
Monday, March 18, 2002

Efforts urging states to drop antitrust litigation against Microsoft are ramping up, and some candidates vying for key state political offices are raising concerns about campaign contributions as the trial's remedy proceedings begin Monday.

California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah, West Virginia and the District of Columbia -- the nine states and the nation's capital that refused a deal between the Justice Department, Microsoft and nine other states, are pushing for stricter sanctions against the software company. The companies testifying in the states' defense include Microsoft competitors AOL Time Warner, Oracle, SBC Communications and Sun Microsystems.

Following are several states' struggles to reach an internal agreement on the case.

Are Californians Fatigued?
California Attorney General Bill Lockyer is one of four attorneys general leading the government's antitrust case against Microsoft. Up for reelection this year, Lockyer's state is home to a myriad of technology companies and Microsoft competitors. Some of those companies have been heavy contributors to his campaign efforts.

On Dec. 12, SBC Communications donated $12,000 to Lockyer's campaign. On June 25, 2001, Oracle made a $25,000 donation, and Oracle donated $25,000 in 2000. America Online made three donations totaling $3,000 in 2001, according to Lockyer's campaign filings.

But Californians suffer from a "general feeling of fatigue" when it comes to the Microsoft case, according to Sonia Arrison, director of the Center for Technology Studies at the Pacific Research Institute. "Combine that with the cost to taxpayers of continuing the case, especially in this economy, and Lockyer might do well to rethink his actions... As the election gets closer, the costs of continuing litigation concerning Microsoft will certainly be an issue," Arrison said via e-mail.

Additional sanctions against Microsoft could cost California software developers and residents $11.1 billion over the next three years, according to a study released by the Microsoft-friendly Association for Competitive Technology.

Meanwhile, a recent Los Angeles Times story reported that Oracle has millions of dollars in computer software contracts with Lockyer's office and sponsored a golf tournament fundraiser for him.

"I want to see Microsoft obey the law," Lockyer has said. "It is not fair to other business, and to consumers, to have one large company break the law for their advantage."

Iowa House Speaker Frowns On AG Action
Iowa House Speaker Brent Siegrist, a Republican, last week sent an e-mail with the subject line, "Speaker to AG: Lay Off Microsoft," to constituents criticizing the litigation. Iowa Attorney General Tom Miller, a Democrat, is the lead negotiator for the states.

"The states' lawsuit against Microsoft is back in the news and Speaker Siegrist says it's time for it to go away. Nine states and the District of Columbia are still holding a gun to the software giant's head in antitrust litigation. Iowa is one of these states," said the e-mail.

"It's time for Iowa's attorney general to call a halt to this.... We have a struggling economy in this country. It makes no sense to continue to pursue good corporate citizens who provide a product of value to the people of our state and create thousands of high-paying jobs."

Kansas Campaign Contributions Questioned
Increased attention has been given to Kansas Attorney General Karen Stovall's role in the case due to recent campaign contributions. Stovall is running against State Treasurer Tim Shallenburger for the Republican gubernatorial nomination. Shallenburger has questioned donations from Microsoft rivals to Stovall.

On Dec. 31, Oracle made two $2,000 contributions. Sun made a $1,000 contribution and a president of Southwestern Bell -- whose parent company is Topeka-based SBC Communications -- wrote checks for $1,000 and $250 to Stovall's campaign, according to filings. That same day, Mike Pettit, president of the anti-Microsoft ProComp, donated $2,000 and his MSP Strategic Communications donated $2,000. Safra Catz, executive vice president for Oracle, donated $1,000, CEO Larry Ellison donated $2,000 and Oracle Chief Financial Officer Jeffrey Henley donated $1,000. Christopher Hankin, director of federal affairs for Sun, donated $500.
Massachusetts Tech Community Is Split

Massachusetts' tech community is divided on how Attorney General Tom Reilly should handle the litigation.

"We have a split in the tech community over whether or not the attorney general here should have accepted the Justice Department's proposed settlement or not, or whether he should be pursuing some further meaningful concessions over Microsoft," said Christopher Anderson, president of the Massachusetts High Technology Council.

The council has a meeting at the end of the month with Reilly to discuss some "legitimate issues" in the settlement. "Clearly, there will probably be a role for us to help impress upon... the Justice Department a couple of points that may be missing from their proposed settlement," Anderson said.

Sun has an East Coast campus in Massachusetts, while Oracle is building a facility. Microsoft has a sales office there.

Utah's More Than 15 Minutes Of Fame
Utah Attorney General Mark Shurtleff, a Republican, is receiving political heat from state Republicans over his role. Shurtleff, 15 minutes before the 11 a.m. Nov. 6, 2001, deadline to join the states in continuing litigation, decided to forge ahead.

A petition circulated at a Republican Central Committee meeting late last year condemned Utah's role in the case. On Feb. 2, the committee almost unanimously passed a similar resolution submitted by member Kenneth Olafson that required the attorney general to post the resolution on the state Web site. Olafson met with Shurtleff about the resolution on Feb. 28. "He's pretty much going to ignore it," Olafson said.

Olafson said much of Shurtleff's staff -- including his antitrust attorneys -- served in his Democratic predecessor's administration. "They have his ear on a day-to-day basis... if I get a meeting once a year, that would be the extreme," Olafson said.

Olafson said he has called the office of Sen. Orrin Hatch, R-Utah, and, "Their attitude is, 'we're protecting Novell and that's it, we don't care about the facts or what the economy does.'" Novell's headquarters are in Provo, Utah.

Hatch, ranking Republican on the Senate Judiciary Committee, has said he wants to be reassured the settlement is strong enough to meet the enforcement standards offered by the D.C. Circuit Court in June, which found Microsoft guilty of monpolistic practices.

"I think at this point in time... I think he's fairly safe," Olafson said, referring to Shurtleff's seat. "But if it turns out that people will have to start paying two to three times more for their computer programs... I think there will be a serious backlash against these activist attorneys general."

Paul Murphy, a spokesman for Shurtleff, said, "The attorney general basically has taken politics out of it and said the law requires a remedy," and the Justice Department's remedy "doesn't do the trick."

Murphy said Shurtleff has met with Microsoft on "many occasions... but basically, we're still going ahead as planned."

West Virginia Seeks Tech Stabilization
West Virginia's House and Senate differ on whether to condemn the state's participation in the suit.

Each chamber voted on a resolution that said West Virginia is "uniquely positioned" to excel in various high-tech industries, particularly biometric technologies, and that the U.S. high-tech sector as a whole "thrives on innovation within a stable and predictable legal environment."

"A pending federal antitrust action against Microsoft... has created instability in high technology markets and has created uncertainties which impact growth and development of new technologies," the resolution reads.

Since 1997, the company has made contributions in excess of $5 million to community organizations, educational institutions and human services agencies there. The resolution urges Attorney General Darrell McGraw to end the litigation swiftly "so that West Virginia may contribute to creating a stable and predictable legal environment for the continued growth and development of innovative high technology industries in West Virginia."

The resolution passed by voice vote in the House March 4, but the Senate defeated it by voice vote March 8.

Last December, McGraw filed suit in state court against Microsoft, alleging the company's business tactics violated state antitrust and consumer protection laws.