Vergnes: There Can Be Only One Microsoft

LONDON (06/14/2000) - The ruling from a U.S. federal judge that Microsoft Corp. be split into two separate companies goes against the integrated approach that the IT industry is heading toward, Bernard Vergnes, Microsoft vice president and chairman of Europe, Middle East and Africa, said Wednesday.

"The IT market and technology is more integrated than ever," he said here at The Wall Street Journal Europe's CEO Summit on Converging Technologies. The IT industry is rapidly focusing solely on the Internet, he said.

The U.S. Department of Justice (DOJ) and 19 state attorneys general successfully sued the software maker in a historic antitrust case heard in U.S.

District Court. Judge Thomas Penfield Jackson sided with the government position when he deemed that Microsoft has a monopoly in operating systems and has used that dominance in an attempt to illegally squelch competition and make inroads into other markets, including Internet browsers. Microsoft did so, he determined, by "tying" its Internet Explorer browser to the Windows operating system.

Microsoft on Tuesday appealed Judge Thomas Penfield Jackson's rulings in the case, including his order that Microsoft be split in two. The U.S. District Court of Appeals for the District of Columbia agreed to hear the appeal. [See "Appeals Court Keen to Hear Microsoft Case," June 13. ]"The verdict is telling us, split Microsoft, create the Windows company and that Windows company can have nothing to do with applications that didn't exist before," Vergnes said.

"We are one company, we have one integrated sales force, one campus, one consulting force, etcetera," he said.

Even though the breakup of the company seems to be the most significant aspect of Judge Jackson's remedies ruling, Vergnes said that Microsoft also has issues with behavioral remedies that are supposed to take effect sooner, perhaps within 90 days of his remedies ruling. The remedies include a ban against favoring any third-party vendor in licensing deals and a requirement that Microsoft provide technical information to partner vendors.

The judge also issued a series of other behavioral remedies he wants to see imposed on Microsoft. Taken in total, "we believe that those points especially slow down innovation," Vergnes said of the behavioral remedies.

Not only does Vergnes find Jackson's remedies ruling unfair, he had several choice words for the process of the trial itself.

"All along the government has been changing the rules, and I don't think we coped very well with the way the process changed as we went along," he said.

Vergnes said there already have been negative effects from the judge's ruling.

"There is some effect on employees' morale," he said, "and our stock price has dropped."

Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or at http://www.microsoft.com/.

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