22 STATES, U.S. TAKE MICROSOFT TO COURT.

Byline: Joel Brinkley The New York Times

The federal government and 20 state attorneys general filed two broad, aggressive antitrust suits against Microsoft Corp. on Monday, launching the most concerted government attack on a single company in a generation.

The suits accuse the world's largest software company of using its monopoly in personal-computer operating systems to win control of the Internet and software products, particularly browsers, which are necessary for viewing and interacting with the World Wide Web.

As Attorney General Janet Reno announced the filing of the suits Monday afternoon, with attorneys general from Connecticut, Iowa and New York standing at her side, she said Microsoft's business practices had ``restricted the choices available for consumers in America and around the world.''

In a meeting with reporters at Microsoft's headquarters in Redmond, Wash., on Monday afternoon, Microsoft's chairman, Bill Gates, said, ``This is a step backwards for America, for consumers and for the personal-computer industry that is leading our nation's economy into the 21st century.

``How ironic,'' Gates added, ``that in the United States - where freedom and innovation are core values - that these regulators are trying to punish an American company that has worked hard and successfully to deliver on these values.''

The Justice Department and attorneys general asked the District of Columbia U.S. District Court to issue a preliminary injunction to immediately stop the practices described in the suits.

But in a curious twist in their decision to take on the company that epitomizes the supremacy of the United States' high-tech industry, they stopped short of asking the court to block the release of Microsoft's improved operating system, Windows 98. Even as the lawsuits were being filed, Microsoft began shipping the product to computer manufacturers, and it announced that it was on schedule to sell Windows 98 in stores beginning June 25.

Joel Klein, the assistant attorney general for antitrust, said the Justice Department would not try to block Windows 98, because the government wanted to ``create options, not restrict them, so we will not try to stop the shipment of the software.''

With the final version of Windows 98 already shipped, it was clear that many consumers were likely to get the new operating system without the limits and remedies being sought in the lawsuits. But Klein also made it clear that his goal was not to block one piece of software but to force Microsoft to change its way of doing business.

``What cannot be tolerated - and what the antitrust laws forbid,'' Klein said, ``is the barrage of illegal, anti-competitive practices that Microsoft uses to destroy its rivals and to avoid competition.''

In a decision that pleased the Justice Department, the case was assigned to District Court Judge Thomas Penfield Jackson, who issued a ruling favorable to the government in the antitrust case filed against Microsoft last October. That suit charges Microsoft with violating a 1995 consent decree by forcing computer manufacturers to accept the company's browser, Internet Explorer, as a condition of licensing its Windows 95 operating system.

The new federal and state suits would require Microsoft to sell a version of Windows 98 that does not include Internet Explorer - or to package Netscape Communications Corp.'s Navigator browser, the principal competing product, with Windows 98. The state suits also ask that Microsoft be forced to include a third Web browser of Microsoft's choice unless Internet Explorer is removed from the operating system.

Microsoft maintains that Internet Explorer is now part of the Windows operating system, not a stand-alone product, and therefore cannot be removed.

Dennis Vacco, the attorney general for New York, whose office will head the states' litigation team, said, ``Our action today aims to protect consumers from a single power controlling and dominating an information infrastructure that one day may be our primary link to communications, commerce and information.''

A senior Justice Department official noted that there were precedents for requiring a company to carry its competitors' products. Long-distance telephone companies, for example, have been required to allow competitors to use their lines, and one airline's reservation system has been required to carry the flight information of competing airlines.

But Gates said neither of the alternatives described in the suits was acceptable.

``I don't think asking us to ship a competitor's product is an appropriate solution,'' he said. ``And if they want us to re-engineer Windows to take these new features out, we'll have to turn to the courts.''

The federal and state suits also attempt to stop Microsoft from requiring that computer makers set up new computers so that consumers see Microsoft's main Windows screen, or desktop, when they first turn on their machines. This requirement is important to Microsoft - and to the government - because the desktop can now serve as a gateway to the Internet and to every other service and piece of software available.

``At stake here,'' said Richard Blumenthal, attorney general for Connecticut, ``is whether Microsoft's control over gateways could throttle Internet commerce - and indeed commerce itself.''

In a statement, Microsoft said: ``Consumers who purchase a new PC and see the Windows desktop as the first screen are assured of the product's quality, simplicity and reliability. Once that first `boot-up' takes place, consumers can customize the desktop in any way they like.''

That may be true, Klein said, but he added that it is ``quite clear'' that most consumers maintain the basic desktop they are given. And a senior government official said the prosecutors see the first-screen requirement as Microsoft's way of maintaining its operating-system monopoly.

Without it, Klein said, computer manufacturers would be able to bring their own ``interesting, challenging opportunities to consumers.''

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Associated Press