[Am-info] Reilly embarks on lonely quest

[Erick Andrews]

URL:

http://www.boston.com/dailyglobe2/337/business/Reilly_embarks_on_lonely_quest+.shtml

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Few vocal, cheering allies surface as AG pursues Microsoft

By Ross Kerber, Globe Staff, 12/3/2002

The decision by Attorney General Thomas F. Reilly to continue a
lonely pursuit of an antitrust case against Microsoft Corp.  would
have generated cheers a few years ago from companies like IBM and
Sun Microsystems, whose complaints about the software giant
persuaded federal and state prosecutors to take on the company in
the first place.

But those days are over, and the political payoff of Reilly's
decision to appeal the most recent court finding is no longer
obvious.  Both companies face other threats now, and other firms
are focused only on their very survival.  Yesterday, even some of
Reilly's business supporters said they regarded his actions as
something of a Quixotic quest after goals no longer at the center
of their interests.

The appeal "is worth pursuing as a matter of principle, but I
don't know if it doesn't fall in the category of tilting at
windmills, and powerful windmills at that," said Shikhar Ghosh,
chief executive of Burlington software maker Verilytics
Technologies and former chairman of the Massachusetts Software &
Internet Council.

On Friday, Reilly broke ranks with most of the other states who
called off their case against the Redmond, Wash., company and said
they would focus on enforcing an earlier court decree limiting
Microsoft's behavior.

Instead, Reilly - joined yesterday by West Virginia Attorney
General Darrell V. McGraw Jr.  - said he would press forward with
an appeal of a federal judge's approval of a broad antitrust
settlement between the company and the US Justice Department,
struck last year.  The deal requires Microsoft to provide
outsiders access to various software code and other steps, but
Reilly said the settlement was filled with loopholes.  He
suggested further restrictions, such as prohibiting Microsoft from
"commingling" computer code between its Internet Explorer browser
and its Windows operating systems.

Paul Egerman, chief executive of transcription systems provider
eScription Inc.  of Needham, said he found Reilly's actions
"neither good nor bad." Egerman, vice chairman of the influential
software council, added that "by coming down in the middle, I'm
showing the same ambivalence that the whole software industry in
the state feels about it." Indeed, the council's members are so
divided on the matter of Microsoft that the group doesn't even
take a formal position on the case, the most important federal
technology-policy issue of recent years.

Among prosecutors, however, some said it makes sense that Reilly
would be among the last left standing.  For one thing, Reilly just
won an unopposed election, and hasn't been worn down by years of
bruising rhetorical combat with Microsoft.

"He's fresher, and there may be some merit in the idea that it's
his turn to carry the ball," said Steve Houck, a former New York
antitrust official who remains in contact with Reilly and other
state officials on the case.

In an interview yesterday Reilly said he's heard privately from
many supporters since announcing his decision.  The politics of
the situation, he said, didn't play a part in his thinking anyway.
"I have a core principle that I believe in, that there's no place
for politics when it comes to law enforcement," he said.

But he also acknowledged Microsoft has outlasted many opponents,
and that he could face a trying crusade going forward.

"Microsoft is powerful and has unlimited resources and from the
beginning has been able to wear down and crush anyone who gets in
their way," he said.  Once it reached a more amiable agreement
with the US Justice Department last year, Reilly said, Microsoft's
"goal was to split the states and wear them down one by one, and
they've accomplished that goal," he said.  "But it's important
that someone stays the course, and Massachusetts will, and bring
this to a conclusion."

Reilly's predecessor, Scott Harshbarger, helped develop the
state's case against Microsoft, filed in 1998, but Reilly wasn't
always the company's most vocal critic and often let the attorneys
general of California, Connecticut, and Iowa take the lead in
hearings.

All three were among those who agreed to settle the matter last
Friday, leaving some long-time activists surprised that Reilly
stayed with the cause.  "I can tell you Reilly wasn't first on my
list" of those expected to fight to the end, said Mark Cooper,
research director at the Consumer Federation of America, a harsh
critic of Microsoft.

State records of contributions to Reilly's 2002 reelection
campaign show donations from people involved in a wide range of
banks and law firms, but relatively few who listed employment at
technology companies.

Reilly said he decided to become more active a year ago, after the
Justice Department struck an agreement with Microsoft that lacked
the harshest remedies suggested by Clinton administration
officials such as breaking up the company, an idea a federal
appeals court rejected.

Reilly said the state's legal costs since the case began total
about $1 million, mostly reflecting the time of staff attorneys
rather than cash expenses.  The state expects to recover those
costs from Microsoft eventually, he said, though by declining to
join the settling states, his office in effect has passed up the
chance to have its costs paid from a $25 million pool Microsoft
agreed to set up.

A Microsoft spokesman said that Massachusetts and West Virginia
can only expect to recover their costs going forward "if they win
their appeal." Asked if the states would be repaid their costs to
date, he said, "that's still an open question."

Among the state prosecutors, some of the largest expenses so far
have been paid by California to a Washington law firm, Williams &
Connolly.  The firm also handled Reilly's notice of appeal last
week, but Reilly said talks are still continuing over exactly what
role the firm will play going forward.

Some policy groups, including Citizens Against Government Waste
and the National Taxpayers Union, have blasted Reilly's decision
as a waste of resources.  In Boston, Mike Widmer, president of the
Massachusetts Taxpayers Foundation, said he wasn't as concerned at
the cost, which is already built into the budget of Reilly's
office.  "The issue of taxpayer dollars is a red herring," he
said.
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-- 
Erick Andrews