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Microsoft Challenges RealNetworks

Updated:
(WASHINGTON) - Microsoft is trying to convince the federal judge in its antitrust case that RealNetworks - one of Microsoft's chief rivals and accusers - is very successful even without the penalties that nine states want to impose on the software company.

A Microsoft lawyer who questioned RealNetworks executive David Richards on Wednesday cited evidence that RealNetworks, one of the pioneer Internet media companies, has its signature product on more than 250 million computers. It also has exclusive deals with several leading computer manufacturers as well as major league baseball.

But the judge threw out other evidence against Microsoft, including an e-mail from an AOL Time Warner executive, Barry Schuler, saying that Microsoft wanted ``to kill (RealNetworks) so badly, it's ugly.''

Lawyers representing the states contended that the e-mails provided context of Microsoft's behavior. U.S. District Judge Colleen Kollar-Kotelly said the states have not called Schuler and those individuals to confirm what Microsoft said.

``I don't see how this can be anything but hearsay,'' Kollar-Kotelly said.

The states want Kollar-Kotelly to force Microsoft to create a stripped-down version of its flagship Windows software that could incorporate competitors' features. The states also want Microsoft to divulge the blueprints for its Internet Explorer browser.

The federal government and nine other states settled their antitrust case against Microsoft last year.

The original judge in the case, Thomas Penfield Jackson, ordered Microsoft broken into two companies after concluding it illegally stifled its competitors. An appeals court reversed the penalty but not the conviction, and appointed Kollar-Kotelly to determine a new punishment.

Microsoft has expressed some frustration that, while Kollar-Kotelly seems sympathetic to the idea the states should not be able to present new allegations of wrongdoing, she has yet to definitively rule on the question.

``We're beginning to sound like a broken record on this point,'' Microsoft lawyer Richard Pepperman said.

Pepperman was to continue cross-examining Richards on Thursday.

Kollar-Kotelly said she is hesitant to rule prematurely. She wants to give the states a chance to show that the new allegations - such as one that Microsoft strong-armed computer maker Dell into dropping support for the rival Linux operating system - are similar to adjudicated violations and relevant to the penalty hearing.

States that rejected the government's settlement with Microsoft and have continued to pursue the antitrust case are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia.
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