Judge Rubber-Stamps DOJ Proposal

WASHINGTON (06/07/2000) - U.S. District Court Judge Thomas Penfield Jackson today ordered the breakup of Microsoft Corp. (MSFT) . The "final judgment" in the historic antitrust case calls for splitting the company in two and also orders behavioral remedies.

Microsoft sprang its last brief Tuesday in its 2-year-old antitrust battle against the government, setting the stage for Jackson ruling today.

Microsoft had until noon EDT on Wednesday to file the brief, but it chose to respond ahead of schedule. Jackson's final ruling is widely expected to hew to the government's demand that Microsoft be split into two companies. Jackson is expected to stay the breakup pending the outcome of Microsoft's appeal but to immediately impose conduct restrictions on the company.

"The government's remedy remains unprecedented and extreme," Microsoft spokesman Jim Cullinan said in a statement. "Should the court agree with the government, we do not believe this remedy will be sustained by the appellate courts."

Gina Talamona, a spokeswoman for the Justice Department, said: "The filing rehashes Microsoft's old arguments, ignores the extensive violations found by the court, denies the need for serious relief and grossly distorts our proposed remedy."

On April 3, Jackson found Microsoft guilty of multiple violations of federal and state antitrust law. Jackson's "conclusions of law" accepted most of the arguments made by the U.S. Department of Justice, 19 states and the District of Columbia.

The government, with the exception of Illinois and Ohio, asked Jackson on April 28 to "remedy" the situation by breaking Microsoft in two, with one company owning the Windows operating systems, subject to various conduct restrictions, and one owning everything else, including the Office suite of software applications and the Internet Explorer Web browser. The case has since devolved into tit-for-tat legal filings, with Microsoft trying to chip away at the breakup proposal and the government refusing to concede any substantive changes.

The government's final brief, filed Monday, rejects much of Microsoft's final editing of the proposal, including requests for more time to plan the breakup and a shorter term for the breakup to remain in effect. The Justice Department has requested that the final judgment remain in place for 10 years, while Microsoft has asked for a four-year term. Microsoft showed Tuesday that it has no further illusions about being able to influence the final proposal.

Among the points Microsoft raised in Tuesday's filing are claims that the government has never adequately defined the phrase "Internet browser." The company says the government's ambiguity makes it hard for Microsoft to plan a breakup. Microsoft also complains that the government's proposal is "so vague and ambiguous as to be unintelligible." The company says many of its employees, who are "accustomed to precision in the ascertainment of objectively verifiable facts," might quit the company rather than live under the terms of the government's proposal.

On May 24, Jackson stunned a packed courtroom by rejecting Microsoft's pleas for more time to mount a remedy defense. The software giant is expected to immediately appeal Jackson's final judgment, regardless of its form, asking a higher court for an immediate stay of Jackson's entire order, including any conduct restrictions.

Microsoft's appeal is expected to include protests that not only did it have insufficient time to defend itself against a breakup proposal, but that Jackson's rapid scheduling since the case began has made it impossible for the software giant to adequately refute the government's claims.

The government has signaled that it will ask Jackson to send the appeal straight to the U.S. Supreme Court. Many legal observers expect the high court to kick the case back to the U.S. Court of Appeals for the District of Columbia Circuit for review.

IDG News Service contributed to this story.

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