WASHINGTON — Microsoft Corp. would keep its Windows monopoly and the power to bully customers and competitors under the Bush administration's proposal to settle the government's 31/2-year-old antitrust case, opponents said.
Industry groups that supported breaking up the world's biggest software company said its settlement with the Justice Department doesn't contain enough restrictions to restore competition to the market for personal computer operating software.
The settlement "allows Microsoft to keep the fruits of its statutory violation, and it leaves intact all of the incentives--and many of the means--for Microsoft to maintain and extend its monopoly in the future," economists Joseph E. Stiglitz and Jason Furman said in papers filed by the Computer & Communications Industry Assn.
The association represents companies such as Oracle Corp. and AT&T Corp. Also filing objections was ProComp, an alliance of software companies including Sun Microsystems Inc. and AOL Time Warner Inc.
Nine states have joined the Justice Department in signing the proposed settlement, which would give computer makers more freedom to promote software that competes with Microsoft. California, Massachusetts and seven other states that rejected the settlement are asking a judge to force Microsoft to give up control of the Web browsing software.
"This is a very tough settlement that puts significant restrictions on Microsoft," company spokesman Jim Desler said. It is "a fair way of resolving this case."
The Justice Department has 30 days to respond to the objections.
Kenneth J. Arrow, a Nobel Prize-winning economist who consulted for the Justice Department in its 1995 antitrust settlement with Microsoft, said he opposes the current plan because "seven years later it is clear that little was accomplished in the prior consent decree."
The latest settlement "is far from sufficient to create effective competition" from rival software, Arrow said in documents filed by ProComp.
U.S. District Judge Colleen Kollar-Kotelly must decide whether the settlement is in the public interest. She has scheduled hearings on the dissenting states' proposals, which would require Microsoft to give computer makers the choice of installing a version of Windows without Internet Explorer.
ProComp's lawyers, Kenneth Starr and Robert Bork, two Republicans who served as U.S. appeals court judges, urged the judge to wait until she has heard the states' remedy proposals before deciding whether to approve the settlement.
"No court has ever approved an antitrust settlement, where, as here, there are remaining plaintiffs in the very same consolidated case," ProComp said in its filing. "It is essential that the court evaluate all available evidence bearing on the 'public interest' of the department's proposed settlement."
The case is the first under a federal law that sets the procedure for judicial review of antitrust settlements reached after a company was found to have broken the law. All other cases involved settlements presented to judges before the government had proven illegal conduct.
Shares of Redmond, Wash.-based Microsoft rose 2 cents to $63.82 on Nasdaq.