7 States Decide Against Microsoft Case Appeal

California and six other states said Friday that they would drop further antitrust litigation against Microsoft Corp., giving the software giant a measure of relief from its legal battles.

Of the nine states that opposed Microsoft’s landmark settlement with the Justice Department, only Massachusetts said it planned to press forward with an appeal. West Virginia will announce Monday whether it will join Massachusetts in appealing the settlement, which was ratified by a federal judge this month.

The settlement requires Microsoft to release more technical information about its operating systems and bars it from punishing computer makers that install non-Microsoft programs on their machines. Critics have contended that the settlement should have done more to prevent Microsoft from abusing its monopoly power in emerging markets such as hand-held computing and Web-based services.

In deciding against an appeal, California Atty. Gen. Bill Lockyer echoed the sentiments of his counterparts in Connecticut, Florida, Iowa, Kansas, Minnesota, Utah and the District of Columbia by saying he would focus on enforcing the settlement approved Nov. 1 by U.S. District Judge Colleen Kollar-Kotelly.

“We determined that the potential for success of an appeal is slim,” Lockyer said. “The only basis for an appeal is either abusive discretion by the judge or that the remedy approved is ineffective. Those are very hard claims to prove.”

Lockyer already has reassigned the senior assistant attorney general who led California’s Microsoft team. Thomas Greene now heads a task force pursuing criminal and civil investigations into whether the state’s energy markets were manipulated during the electricity crisis.

Despite the difficulty of an appeal, Massachusetts Atty. Gen. Thomas Reilly said he planned to pursue his case against Microsoft on the basis that the current settlement is “replete with loopholes.”

“The remedy does not protect consumers,” Reilly said. “It does not restore competition to the marketplace and does nothing to hold the company accountable for its illegal behavior.”

Reilly, known in his state as an activist attorney general with a pro-consumer bent, has taken on a number of high-profile cases.

For example, Reilly suggested in the wake of the Catholic Church’s sexual abuse scandal that all hiring at the Boston Archdiocese should be vetted through his office. In another case, Reilly this year held up the sale of the Boston Red Sox, saying the baseball team’s chief executive failed to accept the highest bid.

Analysts said Reilly faces an uphill battle with Microsoft.

“It doesn’t seem like anyone would be successful,” said Rob Enderle, a research fellow at Giga Information Group in Santa Clara, Calif. “But you have to remember that the attorney general’s office is a political one. Continuing a fight will undoubtedly get them publicity and funding for their reelections.” Microsoft refrained from commenting directly on the decisions of the states.

“Regardless of today’s announcement, our focus is on complying fully with the court’s judgment, working collaboratively with governments to address important public policy issues and on developing innovative products that benefit consumers,” company spokesman Jim Desler said.

Kollar-Kotelly’s ruling capped a five-year case in which federal prosecutors accused the company of using its position as the dominant provider of desktop operating systems to drive competitors out of business. Monday is the deadline to decide whether to appeal the settlement, which requires Microsoft to reimburse the states for nearly $30 million in combined legal expenses incurred thus far.

Aside from Massachusetts, Microsoft still has to contend with numerous other pending cases. The European Commission is investigating the Redmond, Wash., company for antitrust violations in the markets for server computers and media players.

Microsoft also faces suits from competitors -- including Netscape Communications Corp., now a division of AOL Time Warner Inc., and Sun Microsystems Inc. -- as well as class-action lawsuits filed on behalf of U.S. consumers.

Microsoft shares lost 40 cents to close at $57.68 on Friday in light trading on Nasdaq.

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Times staff writers Nancy Rivera Brooks and P.J. Huffstutter contributed to this report.