Out-Law News 1 min. read

Judge indicates he will split Microsoft


Judge Thomas Penfield Jackson yesterday caused Microsoft a serious setback in its efforts against the government’s proposal to break up the company. Jackson gave a strong indication of his willingness to split the company and rejected Microsoft’s plea for more time to argue against it.

Jackson said he did not want to hear any further evidence, rejecting a request by Microsoft to present more witnesses, including Bill Gates who has not given evidence so far in the trial.

Instead, he ordered the US Department of Justice and the 19 states taking part in the lawsuit to submit a final version of their proposed remedy by tomorrow. He gave Microsoft 48 hours to reply.

Microsoft’s lawyers said they will immediately appeal Jackson’s final order, which could come next week.

Parties not directly involved in the case had filed briefs which set out other suggestions for dealing with Microsoft. Jackson indicated that he favoured suggestions in two of these briefs which went further than the government's proposals.

The judge suggested that the government consider dividing Microsoft into three companies, arguing that the government’s plan risked creating two monopolies instead of one, which may have no incentive to interfere with each other’s profitability. Jackson said: “Tell me why they would compete? Tell me why they would effectively inspire competition?”

One brief suggested splitting the company into three: one for the Windows operating system, one for internet operations and one for all remaining products and services.

Microsoft described the break-up plans as punitive and far beyond what it portrayed as the limited set of anti-competitive violations found by the judge.

The government argued that Microsoft would continue its anti-competitive practices unless the company was broken up. As evidence, it presented an internal e-mail by Bill Gates on how the company could break into the personal digital assistant (PDA) market. In the e-mail, Gates referred to making Microsoft’s products work better with Microsoft Office than with competitor’s products:

"We really need to demonstrate to people like Nokia why our PDA will connect to Office in a better way than other PDAs even if that means changing how we do flexible schema in Outlook and how we tie some of our audio and video advanced work to only run on our PDAs.”

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