U.S. Sticks to Its Microsoft Remedy
The federal government Monday accepted minor changes offered by Microsoft Corp. to a plan to split the company in two, but rejected significant alterations to the proposal aimed at preventing future antitrust violations.
The U.S. agreed to call the breakup a “divestiture” instead of a “reorganization,” for example, but rejected the software giant’s request that it be free to delete its e-mail.
“Version 3.0 of the government’s plan would still damage consumers and the economy,” Microsoft spokesman Vivek Varma said, referring to the latest revision of the plan, which was filed with the federal court on Monday. “Despite the cosmetic changes, their plan is still excessive, unprecedented and harmful,” Varma said.
“Microsoft continues to believe it should have been given a fair and reasonable chance to respond to the government’s radical breakup and regulatory proposals.”
Messages from Microsoft Chairman Bill Gates were used as evidence in the trial. The government said Microsoft should be forced to keep its e-mail for four years, citing testimony by Gates that he deletes most of his.
The government said many changes suggested by Microsoft would undermine or frustrate the purpose and effectiveness of the proposed remedy to break up the firm. It rejected other changes as unnecessary.
U.S. District Judge Thomas Penfield Jackson is expected to rule on an appropriate remedy within days of receiving Microsoft’s reply brief on Wednesday.
The judge ruled April 3 that the company broke U.S. antitrust law by abusing its monopoly in personal computer operating systems to the detriment of consumers and other companies. Microsoft has already said it will appeal Jackson’s decision.
Last week, Microsoft offered 44 pages of major and minor changes to the government’s proposal, and the Justice Department and 17 states asked for time to consider them.
Among the minuscule changes accepted: The government agreed to use the words “Personal Computer” and “Manager,” with the words capitalized, rather than lowercase.
But in other areas the company’s suggestions were rejected outright.
The government’s proposal sets out limits on Microsoft’s conduct until and unless it is broken up. The conduct remedies could last as long as 10 years. Microsoft proposed cutting that back to four years.
The government said that 10 years was customary in antitrust cases and that “despite [Microsoft’s] assertion that ’10 years is an extraordinarily long time in the software industry,’ Microsoft has had the dominant position in the operating systems business for at least a decade.”
Microsoft’s stock closed Monday at $66.88, up 56 cents, on Nasdaq.
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* DIGITAL CROSSROADS: Microsoft moves to keep its software developers happy. C1
