ASHINGTON - Opening what could be the most important antitrust battle in decades, the federal government and 20 states yesterday filed broad complaints against Microsoft Corp., accusing the world's dominant software company of illegally crushing competitors and limiting choices for consumers.
The lawsuits, filed in federal District Court here, could reshape the computer age by restricting Microsoft's lucrative monopoly in operating systems, a type of software that has put the firm's products on nearly every desktop computer in the world.
The complaints allege that Microsoft illegally forces computer makers who rely on that operating system, called Windows, to load a variety of other Microsoft products on the computers they sell. The most controversial is Microsoft's browser, which allows users to navigate the Internet.
''This is like having someone with a monopoly in CD players forcing consumers to take its CDs in order to get the machine,'' said Joel Klein, the Justice Department's antitrust chief. ''We believe most Americans would prefer to choose their own CDs, and, for that matter, their own software products as well.''
Equally important, the government said, Microsoft has been able to position itself to become one of the most important players in the emerging businesses of shopping and banking over the Internet, which could become large and profitable markets.
Microsoft did this, the government said, by forcing computer makers to include icons of Microsoft's choosing on the initial screen that users see when they turn on their computers. The icons offer easy access, with the click of a mouse, to Microsoft's Internet browser and to Microsoft-chosen Internet sites, giving the company an unfair advantage over rivals that make browsers or run Internet sites, the government said.
Bill Gates, chairman of Microsoft, said the company was being penalized for improving its product and that the government had no business meddling with the company's software. ''This is a step backwards for America, for consumers and for the personal computer industry that is leading our nation's economy into the 21st century,'' he said at company headquarters in Redmond, Wash.
He said it was ironic that the suits came on the day Microsoft released the latest version of Windows, called Windows 98.
The government does not seek to break up Microsoft, as it did the Bell telephone monopoly in 1984 and John D. Rockefeller's oil monopoly in 1911. But it is seeking to limit Microsoft's influence over the industry and to spur greater competition and consumer choice.
''We want to make sure that the field is open to the next Microsoft, the next great innovator who can help improve our lives and our economy,'' said Attorney General Janet Reno, who charged that Microsoft had a ''chokehold'' over the market for browser software needed to access the Internet.
As part of the lawsuits, federal and state officials are seeking a preliminary injunction that would force Microsoft to either remove its Internet browser from Windows 98 or include a browser from rival company Netscape Communications Corp. The states' suit would require Microsoft to add a browser from a third company of its own choice.
The lawsuits filed by the Justice Department and the states, including Massachusetts, had been long anticipated, and some of the details had been leaked in advance. State and federal officials had planned to file the suits Thursday but delayed after Microsoft initiated a new round of settlement talks, which collapsed Friday.
But the lawsuits contained several surprises.
The states' suit included a previously unknown allegation that Microsoft has used illegal pricing tactics to build a monopoly in the market for ''office productivity software'' such as database managers and word processing programs. This charge could be important to several Massachusetts companies, including Lotus Development Corp. of Cambridge, which once had a leading position in the office-software market but lost it to Microsoft.
According to the suit, Microsoft has required most computer makers to pay a fee for every computer they sold that included any desktop productivity software - regardless of whether that software was made by Microsoft. For example, a company that loaded Microsoft software on half its computers and Lotus software on the other half would still have to pay Microsoft a fee for every computer.
This practice removed any incentive for a computer maker to buy and install office software other than Microsoft's, and accounts for the company's control of 85 percent of the market, the states said. Their injunction request seeks to bar Microsoft from using this pricing tactic.
''That is really unexpected,'' said Paul Gillin, editor-in-chief of Computerworld, based in Framingham. ''I think it's a very tactical issue on the states' part, reflecting that most of them have nascent software industries that compete with Microsoft.''
The lawsuits also detail how Microsoft, from Gates on down, feared the challenge presented by Netscape and its Internet browser. Microsoft worried that with the growth of the Internet, Netscape's product could one day include software applications that in essence would covert it into an operating system that could rival Windows.
The government charges that this fear drove Microsoft officials in 1995 to offer a striking proposal to Netscape: The two companies, Microsoft allegedly said, would carve up the browser market. Microsoft would produce browsers for most of the world's new computers, but it would leave the smaller company unchallenged in making browsers for all the other computers.
''When Netscape rejected that offer,'' Klein said yesterday, ''Microsoft then used its windows monopoly to - and I use Microsoft's own words - `cut off Netscape's air supply.'''
Klein said Microsoft threatened to withhold Windows software from manufacturers unless they agreed to install Microsoft's browswer on all new computers. Microsoft also pressured Internet companies and on-line services like America Online to promote Microsoft's browser over Netscape's browser, Klein said.
Moreover, he said, Microsfot designed Windows 98 so that the browser is tightly intertwined in the software and bears little resemblance to a separate product.
Gates yesterday denied that Microsoft tried to carve up the browser market with Netscape. ''Absolutely not,'' he said. ''We never had any meeting of that kind in any way, shape or form.''
The federal lawsuit, however, says that Chris Jones, who once managed Microsoft's browser program, has ''admitted that Microsoft `absolutely' intended to persuade Netscape not to compete.''
The federal suit also cites internal Microsoft e-mail messages that allegedly show the company used its Windows monopoly to encourage business partners to promote Microsoft's browser, called Internet Explorer, over Netscape's Navigator.
The government did not seek to block Microsoft yesterday from shipping Windows 98 to computer makers, who will begin installing it on new computers. The software will be available to consumers June 25, Microsoft has said. But the injunctions sought by the lawsuits could force Microsoft to make changes to Windows 98 before it reaches the public.
''They key short-term question is whether this is going to delay Windows 98 and hurt the [computer] companies that need it,'' said Gillin of Computerworld. ''The key long-term question is what will living with an antitrust suit do to Microsoft. IBM lived under one for 15 years, and they did just fine. It may crimp Microsoft's style, but I doubt it is going to make them turn tail and run.''
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