No Breakup, Says Microsoft

SAN FRANCISCO (06/07/2000) - Microsoft Corp. should be broken into two companies to protect consumers and the computer industry from future misuse of its monopoly power, Judge Thomas Penfield Jackson has ruled.

The Wednesday ruling ends this phase, at least, of a two-year landmark antitrust trial. Microsoft has vowed to appeal.

One "baby Bill" will take the Windows operating system technology, and the other will oversee Microsoft's applications business, including its Internet services. Senior executives may not hold stock or serve on the board of the company they do not join, according to Jackson's ruling. His order closely follows the recommendation of attorneys for the U.S. Department of Justice and 17 states that advocated a corporate divestiture as a remedy for Microsoft's conduct in violation of antitrust law. Two other state participants in the original suit advocate only behavioral remedies, not a breakup.

Microsoft must submit a proposed plan of divestiture within 4 months to the court and plaintiffs, the U.S. Department of Justice and attorneys general of 19 states and the District of Columbia, Jackson orders. The other parties will answer Microsoft's plan within 60 days, and Microsoft must respond within 30 days of that.

Judge Jackson is clearly keeping up a fast pace in the trial that picked up speed in recent weeks. Only Tuesday, Microsoft filed its final brief answering and questioning the government's most recent proposal to break up the company as punishment for violating antitrust law.

Microsoft executives have repeatedly emphasized that a breakup would create two companies unable to compete in the technology market. Its most recent filing repeats the claim that a breakup would cause "severe harm" to computer manufacturers, software developers, and others in the industry. Microsoft contends that the Justice Department's proposals contain "numerous flaws" that the government attorneys have not addressed.

In particular, Microsoft objects to the government's request for what Microsoft calls "a wholesale transfer of proprietary information" about Windows to competitors, and says the restrictions limit what features the software company can build into products.

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