In his presentation before U.S. District Judge Colleen Kollar-Kotelly, Justice Department lead attorney Philip Beck said that Microsoft was able to hold on to a monopoly in Intel-based operating systems only through anti-competitive acts. But the government was not in a position to make that argument stick, he said.

"We tried very hard the first time around, and we were not able to do it," he told the court. "The causation issues"--actually proving that point about anti-competitive acts--"would have been an uphill battle that would likely have been resolved against us."

Beck's presentation kicked off a hearing mandated by federal law to determine whether the settlement is in the public interest.

The Justice Department and a number of state attorneys general in November reached a deal to settle their antitrust case against the software titan. Nine other states declined to join the settlement and are pursuing their antitrust efforts along a separate track. Hearings on the continuing litigation are scheduled for later this month.

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In the public-interest hearings, Microsoft and the settling states are scheduled to make presentations later Wednesday. A number of third parties also are scheduled to make 10-minute presentations to the court, among them the American Antitrust Institute, telephone company SBC Communications and the ProComp trade group. AAI receives funds from Microsoft competitor Oracle, while ProComp is backed in part by AOL Time Warner, Oracle and Sun Microsystems.

Beck quoted from comments submitted to the Justice Department by SBC and ProComp questioning the settlement's legitimacy. Like many other critics, they argued that the scope of the settlement is insufficient because it would neither limit Microsoft's monopoly nor put an end to it.

ProComp had argued that Microsoft's "monopoly power would have dissipated" if not for anti-competitive acts committed against Netscape Communications' browser and Sun's Java language.

But Beck said the Justice Department failed to proved this during the original trial and later during an appeal of the original verdict. The Court of Appeals upheld the earlier finding that Microsoft was a monopolist that employed anti-competitive tactics; the court also threw out the original penalties imposed.

"We are constrained by the case" as it was originally shaped, Beck said.

Based on the original ruling and that of the Court of Appeals, "We believe we have negotiated an excellent decree," he said.

The Justice Department also questioned whether "the government would be able to prove a broad definition of middleware" if it had continued with litigation, Beck said.

Middleware--applications that interact with the operating system--was at the heart of the original case. The government originally argued that Microsoft, perceiving that Netscape and Java could replace Windows, used anti-competitive means to preserve its monopoly.

Even in conceding the limits of the government's case, Beck emphasized its successes. "It was a major victory and accomplishment," he said.

But in looking at the language of the appeals court decision and what the Justice Department was able to obtain through the settlement, the government is satisfied that it cut a deal that is in the public interest and that exceeds the mandate of the court of appeals, Beck said.

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