UPDATE 2: MS Counters Government Remedy

BOSTON (05/10/2000) - Microsoft Corp. today has proposed alternative behavioral remedies that it says will lead to greater competition in the operating system market. The software giant has asked a federal judge to toss out the U.S. government's recommendation in the ongoing antitrust case that the company be split in two.

Microsoft filed a motion for summary judgment regarding the breakup proposal today, arguing that the findings in the case "do not justify the government's radical request to split Microsoft into two separate companies -- what the government euphemistically refers to as a simple 'reorganization,'" according to one of five Microsoft documents filed in the case today.

In return, Microsoft said it is willing to accept restrictions on its behavior immediately. These restrictions would include disclosure of APIs (application programming interfaces), changes in the way the company deals with business partners, and offering a version of its Windows operating system with the vendor's Internet Explorer browser hidden from consumers.

Microsoft also proposed that the remedy phase of the trial be extended, and offered three options for the postponement of oral arguments. U.S. District Court Judge Thomas Penfield Jackson originally wanted the remedy phase to end within two months of his conclusions of law, released in April.

The software giant today proposed, if Jackson decides to consider the U.S. government's breakup proposal, that oral arguments be postponed until Dec. 4.

If Jackson agrees to Microsoft's summary rejection of the breakup proposal, Microsoft proposes that the hearing be held on Oct. 2. Finally, Microsoft proposes that the hearing be held Aug. 7 if Jackson decides to throw out the government's breakup proposal as well as the government's proposal on "disclosure" remedies, which, for example would require the software company to reveal aspects of Windows code under the monitoring of a third party.

The U.S. Department of Justice (DOJ) and 17 U.S. state attorneys general, all plaintiffs in the historic antitrust lawsuit against Microsoft, have recommended that Jackson order splitting the company in two, with one entity focused on operating systems and the other on applications. Two state attorneys general of Ohio and Illinois, also plaintiffs, filed a separate remedy proposal seeking only behavioral remedies.

Jackson has ruled in favor of the government that Microsoft has a monopoly on operating systems in the desktop PC market and has used that power in an attempt to make inroads into other markets, most notably Internet browser software, and to squelch competition. Before making a final ruling on remedies in the case, Jackson will also hold a hearing, during which the sides will have an opportunity to present their proposals orally.

Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or http://www.microsoft.com/.

(Marc Ferranti of IDG News Service contributed to this report.)

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