DOJ Slams Microsoft's Antitrust Remedy Proposal

SAN FRANCISCO (05/17/2000) - As expected, the U.S. Department of Justice (DOJ) late today lambasted Microsoft Corp.'s proposal to modify its behavior in order to restore competition in the software industry. The department repeated its call for the software titan to be split in two.

"Microsoft's proposed remedy would leave it free to continue the very practices which the evidence at trial showed, and this Court found, to be unlawful and would do nothing to restore competition," the DOJ said in its filing, which was submitted today in conjunction with the 17 U.S. states that are also plaintiffs in the government's antitrust case against Microsoft.

The purpose of the remedy should be to end Microsoft's unlawful conduct, prevent the vendor from breaking the law in the future, and restore competition in the software industry, the DOJ said in its filing. Microsoft's proposal does nothing to address the last issue, and very little to address the first two, the DOJ added.

"Microsoft's proposed remedy is neither serious or sensible," the DOJ concluded.

The filing also argues that Microsoft hasn't shown good reason why the company shouldn't be broken in two, as the DOJ suggested in its own remedy proposal filed two weeks ago.

"Microsoft attempts to elide the need for structural relief by pretending, contrary to the evidence at trial and this court's findings, that its conduct had no effect on competition," the DOJ said. In fact, evidence at trial showed that Microsoft's conduct eliminated a serious threat to its monopoly posed by Netscape Communications Corp.'s Web browser and Sun Microsystems Inc.'s Java programming language, the DOJ said.

The DOJ and 17 U.S. state attorneys general recommended late last month that the judge overseeing the antitrust case -- U.S. District Court Judge Thomas Penfield Jackson -- should cleave Microsoft into two separate companies -- one focussed on the vendor's Windows operating system and the other focussed on software applications. [See "UPDATE 2 - U.S. Proposes Microsoft Breakup," April 28.]The DOJ also recommended behavioral restrictions should be placed on Microsoft until the company breakup takes effect. The restrictions include requiring Microsoft to make key Windows APIs (application programming interfaces) available to ISVs (independent software vendors) to give them a more equal chance of creating programs that compete with Microsoft's.

A week ago, Microsoft asked Judge Jackson to reject the U.S. government's "radical request" to break up the company. Instead, the software giant proposed a set of relatively mild behavioral restrictions, including placing limits on the way it deals with its Windows customers, and offering a version of its Windows operating system that hides the icon for Microsoft's Internet Explorer Web browser. [See "UPDATE 3: Microsoft Counters U.S. Remedy Proposal," May 10.]The DOJ's filing submitted today is its response to Microsoft's remedy proposal of May 10.

Under the most recent schedule provided by the court, the next stage in the case is for Judge Jackson to hear oral arguments about the remedy proposals on May 24.

As part of its May 10 filing, Microsoft asked the judge to delay the start of remedy hearings until Dec. 4 if he intends to consider breaking the software maker into two. Microsoft argued that it would need the additional time to prepare its defense against such a severe measure.

Today's filing from the DOJ was not released until after the stock market closed.

Microsoft's share price closed down 2.6 percent at US$67.69, joining many other high-tech stocks that performed poorly today. The Nasdaq composite index closed down 1.95 percent at 3,644.9.

A copy of today's filing from the DOJ and 17 U.S. states can be found at the National Association of Attorneys General's Web page at

Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or The DOJ, in Washington, D.C., can be reached at

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