Microsoft Remedy Response Due Today

BOSTON (05/10/2000) - Microsoft Corp. is due to file its counterproposal today to the government's plan to break the software maker into two companies and to impose behavioral remedies to stop its anticompetitive business practices.

The Microsoft court brief, expected after the close of the stock market today, is likely to outline behavioral remedies acceptable to the company, including allowing hardware makers more latitude in changing the Windows operating system and providing Windows versions without the Internet Explorer browser software, according to published reports, including an article earlier this week in the Washington Post.

Microsoft officials have said they will strenuously object to the breakup proposal. The U.S. Department of Justice (DOJ) and 17 state attorneys general late last month recommended that a federal judge order breaking the company in two. One of the proposed companies would focus on Windows, and the other would work on applications. The state attorneys general of Ohio and Illinois, also plaintiffs in the government's antitrust lawsuit against Microsoft, filed a separate remedy proposal seeking only behavioral remedies.

Microsoft lawyers intend to ask U.S. Judge Thomas Penfield Jackson, who is presiding over the historic antitrust case, for additional time to prepare a response to the breakup plan.

Already, critics have begun blasting Microsoft's reported strategy expected in today's court filing. The Software & Information Industry Association (SIIA) addressed the likely proposal from the company yesterday at a press conference yesterday with SIIA President Ken Wasch and Glenn Manishin, an antitrust attorney who previously worked for the DOJ.

The Microsoft proposal will be "the antitrust equivalent of no television for a week," in Wasch's view, and tantamount to "half a loaf," in Manishin's.

Microsoft had been a member of the SIIA software trade association, but resigned in March after the group filed a "friend of the court" brief against the software maker. The SIIA has been openly critical of Microsoft's anticompetitive behavior.

Judge Jackson has ruled in the case that Microsoft is a monopoly, which isn't in and of itself illegal in the U.S. What is illegal is using monopoly power anticompetitively, and the judge ruled in a separate decision that Microsoft has done that as well. The company leveraged its operating system dominance to make inroads into other markets, notably Internet browser software, he ruled.

Additional details will follow after Microsoft files its response today.

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