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Government, Microsoft Fight Over Online Music

Nearly a year after Microsoft Corp. agreed to end its anticompetitive conduct, the government is raising concerns the world’s largest software maker is trying to use its dominant Windows operating system to influence where customers buy their music online.

If the dispute isn’t resolved by week’s end, it could become the first test of Microsoft’s landmark antitrust settlement that was approved by a federal court in October 2002.

Lawyers for the Justice Department and 19 state attorneys general have formally complained to a federal judge about a design feature of Windows that compels consumers who buy music online to use only Microsoft’s Internet browser and steers them to a Web site operated by the company.

Microsoft’s design “may be inconsistent” with the settlement, government lawyers wrote in court papers asking U.S. District Judge Colleen Kollar-Kotelly to intervene if the problems aren’t resolved.

The company said Monday it is willing to work with the government but does not believe the design is illegal. Online music purchases are expected to be one of the most-lucrative areas for Internet commerce.

“We believe that the use of Internet Explorer by the Shop-for-Music-Online link in Windows is consistent with the design rules established by the consent decree, and we will continue to work with the government to address any concerns,” spokeswoman Stacy Drake said.

The dispute already has risen to the level of a three-member technical committee of experts established by the judge to help oversee the antitrust settlement.

Those experts are Harry Saal, founder of the company that became Network Associates Inc.; Franklin Fite Jr., a former Microsoft employee, and Skip Stritter, former director of business development for wireless products at Cisco Systems Inc. Saal referred questions about the latest dispute to the Justice Department.

The fight over online music sales was disclosed in documents filed last week with the judge and made available by the court Monday.

The dispute centers on a design feature in Windows XP called “Shop for Music Online,” which lets consumers purchase compact discs from retailers over the Internet. When consumers click the link to buy music, Windows opens Microsoft’s browser software even after consumers specify that they prefer using rival browser software.

The link – prominent whenever a computer user opens a designated folder containing songs – also steers Windows users to a Web site, windowsmedia.com, operated by Microsoft with links to online retailers, such as Buy.com or CDNow. On Monday, the page promoted CDs by Madonna, 50 Cent, Linkin Park and Celine Dion.

The Windows behavior does not affect consumers who use another Internet browser to directly visit other music sellers, such as Apple Computer Inc.’s new iTunes site or the Rhapsody service from Listen.com.

The dispute affects one of the central tenets of the antitrust settlement: improving the ability of rival software vendors to compete against Microsoft’s own programs running on Windows. One settlement provision allows Microsoft’s own programs to launch only if rival software “fails to implement a reasonable technical requirement.”

The long-running antitrust case accused Microsoft of abusing its Windows monopoly to crush software companies whose products could weaken demand for the Windows operating system.

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