Gates Continues Fight to Defend Microsoft against Breakup Order

Published June 8th, 2000 - 02:00 GMT

An unrepentant Bill Gates intends to fight a federal judge's decision that Microsoft must be split apart, by appealing and possibly delaying any action against the software giant for years. 

"This is the beginning of a new chapter in this case," Gates said Wednesday after a federal judge had issued an order, which government and software industry officials hailed as a major step toward restoring competition to the US high tech market. 

"We have a very strong case on appeal and we look forward to resolving these issues through the appeals process and putting this case behind us once and for all," Gates added. 

After 20 months of argument and counter-argument, US District Court Judge Thomas Penfield Jackson came down resoundingly on the side of the government, adopting its recommendation that Microsoft be split in two as punishment for having abused its monopoly. 

However the judge said separately in a newspaper interview that he would prefer the company and the government to reach a compromise solution. 

Jackson wrote in a memorandum accompanying his final order: "Following a full trial, Microsoft has been found guilty of antitrust violations, notwithstanding its protests to this day that it has committed none." 

The court "has also reluctantly come to the conclusion ... that a structural remedy has become imperative: Microsoft as it is presently organized and led is unwilling to accept the notion that it broke the law or accede to an order amending its conduct." 

With that, Jackson said Microsoft would have to be broken up into two competing entities, one to develop the Windows operating system and another to promote software applications -- notably Internet browsing technology, 

He also imposed restrictions on Microsoft's business relations with computer makers designed to prevent it from punishing manufacturers which promote rival software technology and rewarding those which market Microsoft software products. 

Jackson said his order would take effect three months from Wednesday, barring a stay pending appeal, and would last for 10 years. 

Microsoft now has four months to put forward its own reorganization blueprint, after which the government would have 60 days to respond. Microsoft would then have a month to comment on the Justice Department's response. 

Once a final plan is adopted by the court, the company have a year to implement it. 

But such a timetable could be upset by an appeal by Microsoft, which must be filed within 60 days. 

Legal analysts predict the Justice Department will exercise an option available to it under antitrust law and ask that any Microsoft appeal be heard directly by the US Supreme Court. 

Such a tactic would bypass the federal appellate court, which in an earlier case ruled in favor of Microsoft and against the government. 

If the case goes directly to the Supreme Court, legal analysts said a final ruling could come as quickly as one year from now. But if the case goes first to the federal court of appeals, the process could drag on for years. 

Justice Department officials were jubilant Wednesday, hailing Jackson's ruling as a victory for competition and the consumer. 

"The court's order today is the right remedy for Microsoft's serious and repeated violations of the antitrust laws," said Joel Klein, head of the department's antitrust division. 

Computer industry associations welcomed the ruling, foreseeing greater innovation and lower software prices as a result. 

Microsoft had argued that a breakup was extreme and unwarranted and maintained that limitations on its business conduct would have been sufficient to correct the antitrust violations identified by Jackson. 

The company said its appeal would focus on legal and factual errors in the Jackson ruling, as well as procedural irregularities. 

In April Jackson upheld government charges that Microsoft had abused the monopoly position it enjoys in operating systems -- through Windows -- to harm competitors. 

Windows currently runs on nine of every 10 computers in use worldwide. 

The judge also found that the company had tried to monopolize the market for Internet browsers and had illegally incorporated its Explorer browser into Windows in order to thwart rival software producers. 

In an interview with The Washington Post daily, Jackson said he accepted the government and states' proposal for a structural remedy because he wanted to avoid a conduct restraining order that would have required an onerous regulatory scheme. 

He said he relied heavily on the work of the government. "I am not an economist. I do not have the resources of economic research or any significant ability to be able to craft a remedy of my own." 

However, rather than impose a breakup, he said he would prefer both sides to settle the lawsuit out of court. 

Jackson urged the Justice Department and Microsoft to "swallow their own reluctance to compromise and reach a remedy that both sides, if not elated by, nevertheless are willing to extend." 

"I'd much prefer to have market forces accomplish as much of the remedy as could be done," the judge said -- WASHINGTON (AFP) 


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