Microsoft Splitsville?

SAN MATEO (05/26/2000) - Microsoft Corp. may be living out its last days as a high-tech monolith. As early as this week the federal judge who found the company guilty of antitrust violations is expected to issue his punishment.

With a breakup of Microsoft known to be the judge's preferred option, IT soon will know if it might have to deal with one, two, or three Redmond, Washington, purveyors of Windows and Windows-related products. But in the meantime many customers still are skeptical of government intervention.

"Any kind of breakup is not going to stop hostile marketing techniques," said Marc Perl, CTO of Teknowlogy Associates, a consultancy in Petaluma, California.

"They have built Microsoft up into a monopolisticlike business, but it's the same thing IBM Corp. did and does with mainframes. ... I don't see the government going after Big Iron again, and every corporation in America is still based on Big Iron."

Phyllis Koch, assistant CIO of the Bureau of Information Resource Management at the Broward County, Florida, sheriff's office, said, "[A breakup] doesn't bother me a whole bunch. If I want to put another browser on my PCs, I will."

Judge Thomas Penfield Jackson indicated last week that he favored breaking Microsoft into three companies over the Justice Department's original proposal, which was to split Microsoft into two firms, one that builds the Windows operating system and one for the rest of the company's offerings.

However, if Jackson prefers the split-into-three version -- outlined by a high-tech trade group, the Computer and Communications Industry Association and Software and Information Industry Association (CCIA-SIIA), in court filing -- he will have to implement that himself. The Justice Department's revised plan, filed late last week, still called for a split in two.

The CCIA-SIIA argued that the Justice Department's original plan would merely create two monopolies. Cutting Microsoft into three companies -- one with Windows, one with Internet technologies, and one with applications -- would remedy issues, "because Microsoft did not have a browser monopoly when the trial began, but it acquired one in the meantime," the proposal argues.

"If Microsoft's applications company retains Internet Explorer without limitation, that company will retain control over the critical link between the productivity applications monopoly it now has and the monopolies over Internet computing and the server market that Microsoft has sought to acquire," the organization stated in what Jackson termed "an excellent brief."

One industry analyst said a separation of Microsoft's Internet business would help end its monopoly.

"Microsoft ties its operating systems to Internet portals, so when they do business with content vendors ... they would force them to use Microsoft NT servers and the like, and that confers a monopoly power," said Tony Picardi, an analyst at International Data Corporation, in Framingham, Massachusetts.

Jackson also voiced skepticism that Microsoft could be trusted to oversee its own breakup.

"You entrust a great deal of the planning and the execution to Microsoft itself," Jackson told government lawyers, "and I do not think that they will be a willing participant in that endeavor."

Microsoft has until Tuesday to respond. Then Jackson will issue his ruling, which does not have to rely on outside recommendations, and the appeals process will begin.

Additional reporting by Jack McCarthy, a San Francisco correspondent for the IDG News Service, an InfoWorld affiliate.

Would you like two lumps, or three?

The Justice Department is sticking with its plan to split Microsoft in half, but the judge likes a trade group proposal to break the software giant in three.

JUSTICE DEPARTMENT PLAN

Break Microsoft in two: A Windows company and a company for its other offeringsStrict regulations on Microsoft's business practices in the meantimeCCIA-SIIA PLANBreak Microsoft into three companies: One for Windows, one for Internet Explorer, and one for applicationsMake the Internet Explorer browser open source

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