Judge To Microsoft: I'm Still Watching YouJudge To Microsoft: I'm Still Watching You

WASHINGTON (AP) -- Microsoft Corp. has made substantial progress complying with an antitrust settlement it reached with the Bush administration and has agreed to reduce prices it charges competitors that want to use its proprietary technology, government lawyers told the trial judge Thursday.

U.S. District Judge Colleen Kollar-Kotelly cautioned the software maker during a court hearing that she will continue to monitor its behavior under the agreement but acknowledged that Microsoft "most certainly has been responsive in many areas, and progress has been made." She set another court hearing for October.

"I am going to watch closely," the judge said.

Microsoft and government lawyers said the company will announce new, relaxed contracts next week for competitors that want to license some Microsoft technology to build into their software products.

Microsoft said it agreed to reduce from $100,000 to $50,000 a prepayment from competitors who want to use its technology, and has agreed to reduce the price it charges rivals so that it collects 1 percent to 5 percent of the revenues of the software that includes its technology.

Microsoft has previously agreed to charge all computer-makers the same price for its operating system software but still will compensate the largest companies for volume discounts and some marketing efforts.

Kollar-Kotelly urged government lawyers to tell her if they believe Microsoft fails to comply with sanctions under the settlement. A Microsoft lawyer, Rick Rule, told the judge that the company has spent "an enormous commitment of resources" to abide by the agreement and that top executives believe compliance "is an important corporate goal."

"I'm glad there has been progress in this area because I was very, very concerned," said the judge.

Massachusetts is the only state to refuse to settle the landmark antitrust case, and has accused the judge of a "profound misunderstanding" when she approved the settlement among Microsoft, the Justice Department and 18 other states.

On Thursday, the judge dismissed complaints by Massachusetts that it was improperly excluded from discussions among the other states and the Justice Department. Glenn Kaplan, an assistant attorney general there, told the judge there was "no basis" for Massachusetts to be excluded.

"Anybody else want to address this issue? If not, I'll move on," the judge responded.

The legal fight culminated last November when the judge accepted nearly all the provisions of the Bush administration's proposed settlement. She rebuffed arguments by nine states and the District of Columbia that tougher sanctions were essential to restore competition in the computer industry.

All the states except Massachusetts eventually joined in the settlement, which gives Microsoft rivals more flexibility to offer competing software features on computers running its flagship Windows operating system.