- The Washington Times - Saturday, June 30, 2001

Microsoft Corp. said yesterday it shouldn't be forced to split into two companies, since an appeals court decision overturned crucial parts of the federal government's case against the software giant.
"The ruling significantly narrowed the issues in the case," Microsoft spokesman Jim Cullinan said.
The 19 state attorneys general who sued Microsoft, claiming it illegally stifled competition, yesterday insisted that any settlement agreement must be strong enough to prevent anti-competitive behavior.
"The main objective is to change fundamentally the way Microsoft uses its monopoly power in the market," Connecticut Attorney General Richard Blumenthal said.
That may require breaking the Redmond, Wash., software developer in two, he said.
The U.S. Court of Appeals for the District of Columbia on Thursday unanimously overturned the lower court's ordered breakup of Microsoft and returned to the lower court a ruling that said Microsoft illegally tied its Windows computer operating system to its Internet Explorer browser. The appeals court also threw out the allegation that Microsoft illegally gained a monopoly in the market for Web browsers.
U.S. District Judge Thomas Penfield Jackson had ordered on June 7, 2000, that Microsoft be split in two — one company that develops and markets its software applications and one that makes and markets its operating systems and servers.
"The Court of Appeals certainly has kept breaking up the company as a potential remedy, and so have we," Mr. Blumenthal said.
Although the appeals court decision wiped away some of the violations that the lower court found Microsoft guilty of, the appeals court also said the company violated antitrust laws through its monopoly in the market for operating systems.
The Department of Justice hasn't indicated whether it will return to court or try to reach a settlement with Microsoft. Officials said they must review the 125-page appeals court ruling before deciding how to proceed.
The parties have three options:
* Either side could appeal to the Supreme Court.
* The government could return to District Court, where a new judge would decide a new penalty, according to the ruling by the appeals court.
The most surprising outcome of the appeals court's decision was its refusal to accept the breakup order of Judge Jackson, whom they lambasted because his behavior gave the 78-day trial an "appearance of bias."
* Or the two sides could negotiate a settlement.
All parties have indicated a willingness to discuss a settlement.
Without a settlement, litigation could last years.
"We're open to a settlement," said Bob Brammer, spokesman for Iowa Attorney General Tom Miller, who led the states' fight against Microsoft.
Microsoft founder and chief software architect Bill Gates yesterday repeated his interest in settling the government's ongoing antitrust suit against the company he founded in 1975 with Paul Allen.
"We certainly believe the ruling opens up the door for the parties to come to the table," Mr. Cullinan said.
The federal government recently said it would seek a settlement of its lawsuit against tobacco companies, a signal that the Bush administration may be willing to settle the case against Microsoft. Both the Microsoft and tobacco cases were brought by the Clinton administration.
Bush administration officials said last week that Attorney General John Ashcroft has told congressional leaders that Justice Department lawyers will attempt to reach a settlement in a lawsuit against the tobacco industry.
Microsoft rose 26 cents a share on Nasdaq yesterday, closing at $73.

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