The report, titled Swiss Cheese Windows: Estimating Some Costs of the Nine State Remedy, was published by the Association for Competitive Technology (ACT), a coalition of 300 IT companies that includes Microsoft.
ACT argued that the nine states' request that PC makers be allowed to replace Microsoft middleware with products from competing vendors will cost the industry between $30bn and $80bn (£56bn) over the next three years in the development, testing, marketing and support of third-party middleware.
If the states' middleware proposal works as intended, said the report, the result will lead to consumer confusion and higher software costs. The proposal could even decrease industry competition by saddling small software makers with untenable development costs for creating and maintaining multiple versions of their products, forcing those companies to exit the industry.
In addition to increasing costs, the states' proposal creates a serious fragmentation problem by encouraging PC vendors to remove Microsoft middleware code from the operating system, potentially undermining Window's usability, ACT said.
"The potential fragmentation problem can be illustrated with the example of sound playback software," the report says. "Some OEMs (original equipment manufacturers) might decide to include the Windows Media player, while others might prefer to reduce their costs by including an alternative, such as RealPlayer, WinAmp, or QuickTime, or perhaps not including any player at all. On Christmas morning, when little Johnny turns on the computer to play his new video game, there will be no sound if his parents purchased a computer missing the needed media player."
ACT maintains that the proposed Microsoft/DOJ settlement is preferable to the nine states' remedy because it does not require that Microsoft actually remove its middleware code from Windows, only that OEMs and consumers be allowed to replace Microsoft's middleware products with rival tools. "Developers can count on the Microsoft middleware product being there and can write to its APIs (application programming interfaces) with the assurance that the APIs will reside in the operating system used by their consumers," the report said.
"The bottom line is, it's an all-pain, no-gain scenario," said ACT President Jonathan Zuck.
No industry analysts have yet been briefed on the study, which was only completed Thursday, Zuck said.
"Swiss Cheese Windows," written by University of Texas economist Stan J Liebowitz, is available on ACT's Web site.