WASHINGTON - Former Netscape chief executive James Barksdale said Microsoft still chills the technology industry years after the software giant was charged with antitrust violations.

Barksdale, now a venture capitalist, said Microsoft's many tentacles scare off investors in potential competitors.

"If you are knowing investing in a product that Microsoft has a monopoly in ... it generally isn't prudent to go in that direction," Barksdale said.

Barksdale was testifying on behalf of the nine states seeking harsh penalties against Microsoft for using unfair tactics to prey on rivals.

The states are asking U.S. District Judge Colleen Kollar-Kotelly to force Microsoft to create a stripped-down version of its flagship Windows software that could incorporate competitors' features. The states also want Microsoft to divulge the blueprints for its Internet Explorer browser.

The federal government and nine other states settled their antitrust case against Microsoft last year.

The original judge in the case, Thomas Penfield Jackson, ordered Microsoft broken into two companies after concluding the company illegally stifled its competitors. An appeals court reversed the penalty but not the conviction and appointed Kollar-Kotelly to determine a new punishment.

Microsoft has expressed some frustration that while Kollar-Kotelly seems sympathetic to the idea that the states should not be able to present new allegations of wrongdoing, she still has made no definitive ruling on the question.

Kollar-Kotelly said she is hesitant to rule prematurely because she wants to give the states a chance to show that the new allegations - such as one that Microsoft strong-armed computer maker Dell into dropping support for the rival Linux operating system - are similar to adjudicated violations and relevant to the penalty hearing.

To provide guidance, Kollar-Kotelly cited specific testimony by Sun Microsystems executive Richard Green about whether Microsoft can justify how it excluded Sun's Java programming language from Microsoft's Windows XP operating system.

"I'm not going to consider that," Kollar-Kotelly said. "It's not going to be part of my findings."

The judge also limited testimony that Barksdale could give concerning Windows XP and his views of whether the states' proposed penalties are any better than those agreed to by the federal government.

Kollar-Kotelly said she understands why Microsoft is concerned. "I think some of the direct testimony needs to be culled through a little more carefully," she said.

The judge was scheduled to hear from RealNetworks vice president David Richards on yesterday.

States that rejected the government's settlement with Microsoft and have continued to pursue the antitrust case are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota and West Virginia, along with the District of Columbia.