- The Washington Times - Wednesday, August 16, 2000

The Justice Department urged the Supreme Court yesterday to decide quickly whether Microsoft Corp. should be broken into two computer-software companies.

It said delay "could irreparably harm competition in a vital and rapidly evolving sector of the national economy."

In a brief filed with the high court, the government opposed Microsoft's request that its appeal of a trial judge's breakup order go first to the U.S. Circuit Court of Appeals for the District of Columbia before reaching the Supreme Court.

The court should agree to skip the intermediate panel for only the third time since 1974 because this case "has immense importance to our national economy," the government said.

"It is especially important to the rapidly developing high-technology sectors, which need to know how they will be affected by the remedies resulting from this case."

The government estimated that a final resolution of the antitrust case would be reached at least one year earlier if the high court exercised its discretion to take the case now.

In Redmond, Wash., Microsoft spokesman Jim Cullinan responded yesterday, "We continue to believe that the Supreme Court would benefit from an initial review of this very complex and technical appeal by the Court of Appeals and we look forward to responding next week in our reply brief."

Both sides had a motive left unstated in their court briefs. The company wants its appeal heard first in the Court of Appeals because that court has twice reversed decisions of trial Judge Thomas Penfield Jackson on Microsoft-related matters. The Justice Department wants to avoid the Court of Appeals for the same reason.

Last month, Microsoft told the Supreme Court its appeal should take the slower route. The company's brief urged the court to avoid "the onerous task of sifting through a large and complex record and forgoing the many benefits of intermediate appellate review."

But the Justice Department called the company's arguments unconvincing. "The District Court has distilled the record into clear and well-organized findings of fact that provide a detailed road map of its reasoning," the government said.

The department pointed out that from 1903 until 1974, all such antitrust appeals went directly from the trial court to the Supreme Court. It said Congress altered the law so the high court could avoid routine appellate work, but preserved the justices' discretion to directly review exceptionally important public antitrust cases.

"If this case does not qualify for direct review," the government said, "it is difficult to imagine what future case would."

Judge Jackson ruled that Microsoft had engaged in illegal anti-competitive conduct to maintain its monopoly over the operating systems that run personal computers.

He ordered the company to split itself into two companies. One would sell Windows, the operating system that runs most of the world's personal computers. The other would sell everything else the company produces, such as its Internet services and its lucrative Office software suite, which includes popular word-processing and spreadsheet programs.

Judge Jackson ordered interim restrictions on Microsoft's behavior until the split is complete. Among those restrictions, he ordered Microsoft to divulge to outside developers technical information about how its operating systems interact with its software. Those developers would be able to pick apart the computer code without cost to improve their understanding of it and make their own products.

Microsoft also would no longer control what icons are on the Windows operating screen when a user buys a computer. A person buying a computer from a distributor such as Dell or Gateway would see a desktop that looked nothing like the usual Windows desktop.

But Judge Jackson immediately stayed his long-term remedy until the appeal is resolved. Later, he also stayed his interim remedy at the company's request. The government argued that the stays make quick Supreme Court review more necessary.

"Delay will postpone and likely complicate substantially the restoration of competition in the affected high-technology industries, which evolve at an extraordinary pace," the government said. "No firm in the affected industries can confidently plan or commit resources until it knows whether or when the final judgment will take effect."

The government said the case was similar to the breakup of AT&T;, which produced the only two other antitrust appeals that the high court has taken directly from the trial court since the law giving it discretion was enacted in 1974.

In both AT&T; and Microsoft, the government said, an overwhelmingly dominant firm in an important market was ordered broken up to prevent abuse of monopoly power. AT&T;, however, agreed to its breakup, which was appealed by third parties.

The nine justices are not expected to say until next month whether they will grant direct review or send the case to the appeals court. The highest court's 2000-2001 term begins Oct. 2.

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