Microsoft Goes On Offensive Over Ruling

SAN MATEO (04/28/2000) - Sounding angry, incredulous and defiant, Microsoft Corp. Chairman Bill Gates and President and CEO Steve Ballmer blasted the Department of Justice on Friday, vowing to fight the government's proposal that the software giant be regulated and broken into two companies.

Gates, Ballmer, and William Neukom, Microsoft's chief lawyer, called the Justice Department's proposed punishment of Microsoft in the wake of the company's conviction on antitrust charges "very disturbing," "unprecedented and radical," "extreme," and "dangerous."

"Microsoft could never have developed Windows under these rules ... this [proposal] was not developed by anyone who knows anything about the software business," Gates said in a teleconference.

"This is really out of bounds, really out of touch with what's going on in our industry," Gates said.

According to Neukom, Microsoft will meet U.S. District Judge Thomas Penfield Jackson's May 10 deadline to answer the Justice Department's proposal, but will seek to lengthen the remedies process because "the government's excessive demands will require months of hearings and discovery." Neukom said that a direct appeal of the final case to the Supreme Court was highly unlikely.

He also questioned the government's focus on Microsoft Office in the remedies was surprising because the original case focused on Windows and the Internet Explorer browser. That will be a key factor in Microsoft's eventual appeal, he said.

"They are seeking relief that has nothing to do with the lawsuit because the industry has moved past the issues addressed in the lawsuit," Neukom said.

Ballmer insisted that in the end Microsoft will not be broken up, and Neukom said he knew of no plans on the drawing board at Microsoft to implement such a proposal.

However, an East Coast high-tech consultant familiar with Microsoft said Gates, Ballmer, and other high-ranking company officials have already discussed a potential breakup of Microsoft into two companies.

"That is why a lot of guys at Microsoft are leaving; they know Microsoft is planning for the breakup now," said the consultant, who requested anonymity.

"It isn't like everyone is giving up, it is just like, 'Hey, let's reorg the company so if we have to do it, it will make it easier to do it."

Microsoft Corp., in Redmond, Washington, is at www.micrsosoft.com. The Department of Justice, in Washington D.C., is at www.usdoj.gov.

Bob Trott is an InfoWorld associate news editor based in Seattle. Additional reporting by Ed Scannell.

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