A Palm executive turned the Microsoft remedy hearing to a new topic, offering testimony as to how the software giant could leverage its monopoly in the PC operating system market to stifle competition in the area of software for handheld devices.

A Microsoft lawyer cross examined Michael Mace, chief competitive officer of Palm's software subsidiary, PalmSource, asking how he believed Microsoft could harm Palm's position in the handheld operating system market when Palm itself owns around 80 per cent of that market. In his written direct testimony, Mace supported a number of remedies suggested by the nine states and the District of Columbia that did not agree to an antitrust settlement with Microsoft. He supports those remedies because they would prevent Microsoft from gaining an unfair advantage in the handheld OS market, he said.

The remedy hearing, which began last week, is for District Court Judge Colleen Kollar-Kotelly to evaluate remedies to Microsoft's anticompetitive behaviour that have been proposed by the non-settling states and by Microsoft.

Microsoft makes it tough Mace claimed in his written testimony that Microsoft - which Palm considers its most important competitor - could hinder Palm's ability to compete in the handheld operating systems market by limiting the ability of the Palm OS to interoperate with Windows PCs. Specifically, Microsoft could make it tough for Palm users to sync data between a PC and their handheld device, read and edit documents created in Microsoft's Word and Excel applications, and generally enjoy a Web browsing experience similar to that on the PC.

"Because a handheld's core use is to manage a user's personal information and electronic mail, it must interoperate extremely well with the tools used today to perform those functions. Those tools are primarily Microsoft-controlled software running on personal computers and servers," Mace said in his direct testimony.

If Microsoft were forced to provide Palm with access to intellectual property behind Windows in the form of programming interfaces, as the states have proposed, Braun asked, wouldn't that give Palm an unfair advantage over Microsoft? It would prevent Palm from being discriminated against, Mace answered.

"It's more a matter of having a level playing field" with Microsoft, Mace said, so that the Palm OS could integrate with Windows PCs to the same degree as Microsoft's own handheld OS, called PocketPC.

Delaying tactics In an example of how he believes Microsoft has already tried to put Palm at a disadvantage, Mace wrote in his direct testimony that the software giant purposefully delayed allowing Palm into one of its developer programs. Microsoft's Visual Studio Integration Program is designed to let non-Microsoft companies integrate software development tools into Visual Studio, Microsoft's suite of development tools. Palm, looking to promote the development of enterprise applications for the PalmOS, believed that most enterprise developers use Microsoft tools to create their applications, and saw this program as an opportunity to get those developers creating programs for the PalmOS, according to Mace's testimony.

Microsoft purposefully delayed Palm's admittance to the program, Mace said. Braun asked if Mace thought Microsoft had acted unlawfully in doing so. Answering that he didn't know antitrust law well enough, Mace said he believed Microsoft was using its existing dominance in the PC market to hinder Palm's ability to compete in the handheld operating system market.

"I'm hoping you folks will let us know if that's legal or not," Mace said to the judge and attorneys.

To date, Palm has not gained admittance to the Visual Studio Integration Program, a Palm spokeswoman.

Microsoft's attorney also showed a marked up draft of the remedy proposals that the non-settling states sent to Palm for review, and then showed the states' final revised remedies where Palm's suggestions had been incorporated. During opening statements, Microsoft said it would prove that the states relied on Microsoft competitors to help draft its proposed remedies, and that they are designed to help bolster those companies as they compete with Microsoft.

The hearing will resume Tuesday with Microsoft's continued cross-examination of Mace.