The proposal will allow Microsoft to continue to sell a fully featured Windows operating system, but it will also be required to produce a stripped-down version that would allow other PC makers to add applications.
The proposal, filed with the US District Court on 7 December, goes far beyond the settlement Microsoft reached in November with the US Department of Justice and nine of the 18 states involved in the antitrust case.
Connecticut Attorney General Richard Blumenthal said the proposal used June's US Court of Appeals decision as a blueprint. The decision upheld a finding that Microsoft had unlawfully maintained its monopoly in operating systems. "Our hope is that it will prevent the monopolistic conduct," Blumenthal said.
"I want to see Microsoft obey the law," said California Attorney General Bill Lockyer. "It's not fair to other businesses and it's not fair to consumers to have one large company break the law to their own commercial advantage." The goal, he said, "is to have an open and fair competitive market place".
The proposal includes some of the provisions of the US Department of Justice settlement, including mandating uniform licensing and pricing of the Windows operating system to PC makers. But in many respects, it is a different proposal.
For example, the plan calls for the appointment of a "special master", a person with far more authority to oversee Microsoft's operations than the three-member committee proposed in the Justice Department's settlement. The proposal also broadens the ban on retaliation to include just about anyone who helped the government in this case.
Microsoft has called the proposal extreme and said it believes the Justice Department's proposal is fair.
In calling for opening up the source code for Internet Explorer, the remedy said: "Given that Microsoft's browser dominance was achieved to bolster the operating system monopoly, the remedial prescription must involve undoing that dominance to the extent it is still possible to do so. Accordingly, the appropriate solution is to mandate open source licensing of Internet Explorer."
The remedy also calls for mandatory distribution of Sun Microsystems' Java technology with the Windows operating system.
Most significantly, the agreement calls for cross-porting of the Office suite, which has well over 90% market share already, to other operating systems, including Apple Computer's Macintosh operating system.
"It's a serious, credible effort to address the real problem," said Ed Black, chief executive of the Computer & Communications Industry Association, whose members include Oracle and Sun Microsystems. Black, who has called the Department of Justice settlement a sell-out, said the latest remedy proposal would provide some viable options for other companies to compete against Microsoft.