- The Washington Times - Thursday, May 11, 2000

Microsoft Corp. said yesterday it is willing to stop installing icons that lead to its Web browser on its Windows operating system to avoid having the company broken into two pieces.
The proposal to settle a federal antitrust case against the software maker came in a formal response to a Justice Department plan to provide remedies for monopolistic practices.
The Redmond, Wash., company also said it is willing to let computer makers prominently feature software from competitors on the Windows computer screen, or desktop, and that it is willing to give other software developers access to technology necessary to write programs for Windows.
But Microsoft continued to argue the breakup proposal is unprecedented and should be thrown out by U.S. District Judge Thomas Penfield Jackson. If it is not thrown out, the company offered proposals on how the case should proceed. Under one Microsoft option, a trial would not begin until December.
"We believe there is no basis in this case for the government's unprecedented breakup proposal, and we are hopeful that the court will dismiss this excessive demand immediately so that the case can move forward much more rapidly," Microsoft Chairman Bill Gates said.
In a statement released late yesterday, the Justice Department said Microsoft's proposal wouldn't prevent the company from engaging in the same anti-competitive behavior it has already been found guilty of committing.
"Microsoft's proposal would not prevent attempts to divide markets with competitors, retaliation against PC manufacturers and software developers that support non-Microsoft technologies, or using tying [of two products] to require PC manufacturers to ship other Microsoft products with Windows," the department said.
The Justice Department and 17 state attorneys general asked the judge on April 28 to break the company into two parts one to develop and market the Windows operating system and the other to develop Microsoft's other software and Internet holdings, including the Microsoft Office suite of programs.
The case against Microsoft stems from an antitrust complaint filed by the government in May 1998 that charged Microsoft with illegally using its monopoly power to eliminate Netscape Navigator, a rival Web browser now owned by America Online Inc. Microsoft tied its browser, Internet Explorer, to its Windows operating system, which dominates the market.
Judge Jackson ruled April 3 that Microsoft is a monopoly that illegally stunts innovation and has harmed consumers in violation of federal antitrust law.
The government's breakup proposal was intended as a remedy to end the monopolistic business practices.
Microsoft maintains its aggressive practices were nothing more than competitive behavior and insists it did nothing wrong.
But Judge Jackson's orders required Microsoft to submit its own proposed remedies.
All the remedies the company proposed yesterday would expire in four years.
State attorneys general that sued Microsoft disputed the effectiveness of the company's proposals.
"Microsoft is in denial," Connecticut Attorney General Richard Blumenthal said. "It denies doing anything wrong and is offering nothing new. On first review, Microsoft's proposed remedies seem plainly inadequate to repair the damage done by its illegal misuse of monopoly power, and to stop future misconduct."
The attorneys general also disputed the wisdom of the proposed plan by Microsoft to delay a trial on the government's plan to break up the company if Judge Jackson endorses that plan until December.
"The states also believe this case should continue to move steadily ahead to a conclusion and not be derailed or dragged out by Microsoft," said Iowa Attorney General Tom Miller, head of the states' effort to prosecute Microsoft. "Judge Jackson has set exactly the right tone and pace, moving ahead carefully and thoroughly, but swiftly."
Microsoft attorney Bill Neukom said the company needs until December to prepare its case opposing breakup.
"The more extreme the remedy, the more extensive the procedures, the more time Microsoft deserves to defend its interests," Mr. Neukom said.
He said that if the judge rejects the breakup proposal, but wants to consider the government's request to impose immediate limits on Microsoft's business practices, the company will need 10 weeks to gather evidence. It proposed an Aug. 7 hearing.
Mr. Neukom said that if the judge dismisses the breakup plan but wants to consider the government's demand that Microsoft disclose the code for the Windows operating system, Microsoft will need until Oct. 2 to gather evidence and examine witnesses.
Disclosing the source code for Windows was among the so-called behavioral remedies proposed by the 17 states and Justice Department.
The government has until May 17 to counter Microsoft's response, and Judge Jackson has scheduled a May 24 hearing for arguments on proposals to punish the company.
Microsoft, which filed its proposal with the court after markets closed, saw its stock close yesterday down $1.63 on the Nasdaq stock exchange at $66.19.

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