BOSTON (05/10/2000) - Microsoft Corp. struck back today at the government's plan to break up the company, warning of "massive disruption" to its operations and the possibility of its employees "leaving in droves," while accusing the government of embarking on an "extreme" and "radical" plan that isn't supported by either history or the law.
"The government seeks to rip apart the company that until recently had the largest market capitalization in the world - an extreme remedy not even hinted at in the government's complaint. The law and the facts do not support such a radical step," Microsoft said in its legal brief, filed late today in U.S.
District Court in Washington.
Instead, the software giant proposed a series of conduct remedies that would broadly affect its licensing and pricing arrangements with personal computer makers, and ensure timely access to technical information for independent software developers, among other provisions.
Microsoft's proposal is the polar opposite of what the U.S. Department of Justice and 17 of the 19 states involved in the lawsuit have backed. Their plan would split the company in two, separating the operating system from all applications including Office, server software and developer tools.
Both sides are due in court May 24 to argue the case. Microsoft asked for a hearing delay as late as Dec 4. In asking the court to reject the remedy proposed by the government, Microsoft argued that "no court has ever ordered significant structural relief in a contested case where the defendant obtained its leading market position through internal growth rather than through acquiring its rivals."
In the breakups of AT&T Corp. and Standard Oil, Microsoft said, the defendants had separate operating units "that could be separated from one another without massive disruption."
In contrast to those companies, "Microsoft does not have free-standing operating units devoted to particular regions or types of products - it has one headquarters, one set of sales and marketing subsidiaries around the world, one sales and marketing force, one product support organization, one basic research unit, one finance department, etc."
Microsoft also said most of its assets are its intellectual property, and its most important assets are its people, "who may leave the company in droves if draconian structural relief is imposed."
"The game is basically over. And Microsoft knows that the appellate court is its only real shot at avoiding significant government intrusion," said Hillard Sterling, an attorney at Gordon & Glickson PC in Chicago. "Judge Jackson is on the verge of ordering breakup, almost regardless of what Microsoft says."