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By Suzanna Kerridge, 5 March 2002 12:00

NEWS Microsoft CEO Steve Ballmer has rejected the proposed settlement by the remaining nine dissenting states and accused them of trying to take away Microsoft's ability to compete and innovate. In a recently released tape of Ballmer's legal deposition, an unusually subdued Ballmer claimed the company would be forced to scrap Windows if it was made to reveal some of the inner workings of the operating system as proposed by the states. In addition, the nine states are asking for sanctions that would force Microsoft to allow PC manufactures to install non-Microsoft software on their machines. Ballmer rejected both the proposed versions of the settlement by the nine states claiming Bill Gates, chairman, and Jim Allchin, group vice president of platforms, had professed the proposals as not technically feasible. "Both Gates and Allchin see more complexity than I do in engineering a version that complies with the states proposals. My comments were quite strong but Gates and Allchin found it even more of a technical challenge." Ballmer claimed the cloning of Windows would be rife if the company was forced to disclose the inner workings. A modular, stripped-down version of Windows that allows PC OEMs to offer a variety of software is among the states proposals. However, Ballmer said these sanctions would result in the release of thousands of versions of Windows and would lead to consumer confusion and an erosion of competition for Microsoft. "The consumer will suffer dramatically. If you get a certain version of Windows it has a certain type of user interface, you can ask a friend to help, it runs certain types of applications and it does support a certain ser of hardware devices. The number one proposal takes away all value to the customer... because Windows cannot be depended on to do anything the consumer expects it to do." Gateway and Palm are expected to testify in the formal hearings - due to start on 11 March. The case is expected to run for six to eight weeks. Michael Mace, chief competitive officer at Palm is expected to testify that Microsoft has made active attempts to block Palm's development through anti-competitive practices such as preventing access to Microsoft development tools. Judge Kollar-Kotelly will also hold a separate hearing on 6 March to determine whether the Microsoft-US Department of Justice settlement, accepted by the other nine states, is in the public interest.