Friday, April 28, 2000

A Microsoft breakup plan expected to be proposed Friday isn’t expected to change the defiant attitude of the computer giant’s managers.

But Microsoft’s denials paint a “distorted” picture of the antitrust case, New York Attorney General Eliot Spitzer Thursday, and he lambasted the company for making repeated statements asserting its innocence.

Microsoft Chairman Bill Gates and Chief Executive Steve Ballmer have consistently maintained the company did not violate the Sherman Antitrust Act, even though U.S. District Court Judge Thomas Penfield Jackson said April 3 it broke the law.

“It is astonishing to me that Microsoft’s two highest executives continue to ignore the case that the states and federal government have proved in court.

“And it is astonishing to me that they continue to present themselves as desiring to empower consumers when their conduct shows a clear desire to restrict consumer choice and confine consumers only to try those products that Microsoft wants to produce. And I am amazed that they still profess to have done nothing wrong,” Mr. Spitzer said.

Microsoft spokesman Jim Cullinen said Mr. Spitzer fails to acknowledge the company’s right of appeal, and the case, despite Judge Jackson’s ruling, isn’t over yet.

“We are in the fifth inning of a nine-inning game,” he said.

The Justice Department and 19 states that sued Microsoft must file their plans by the end of the day today outlining how to deal with Microsoft’s violation of the antitrust act and end the anti-competitive behavior Judge Jackson said the company engages in.

The Justice Department is likely to propose splitting Microsoft in two, a plan the federal government and the 19 states involved in the lawsuit have talked about since settlement talks began last November.

“A number of us are on the same page with the Justice Department,” which backs a plan to split Microsoft into two companies, a source with the coalition of states said Thursday.

A group of economists filed a brief Thursday urging that the court split Microsoft into four companies.

Even Microsoft privately expects the states and federal government to file a proposal to break up the company, said Ed Black, president of the Computer and Communication Industry Association, a District of Columbia-based group that favors a breakup plan.

Microsoft won’t speculate on what the Justice Department and states will file.

But Microsoft’s public defiance and repeated statements that it has done nothing wrong could be harmful, he said.

“People think they are intransigent. At this point, Microsoft is its own worst enemy,” Mr. Black said.

One-third of Americans surveyed support the antitrust decision against Microsoft. The Newsweek poll of 752 adults conducted this month found that 34 percent of the respondents disagreed with the ruling by Judge Jackson, while 34 percent agreed with it and 32 percent had no opinion.

Despite the likelihood the Justice Department’s plan will propose breaking Microsoft into two companies one to market the Windows operating system and one to market the company’s remaining products pro-Microsoft groups Thursday were hoping for leniency.

“I hope it’s a trial balloon to soften Microsoft up for less extreme proposals,” said Jonathan Zuck, president of the Association for Competitive Technology, which represents information technology companies and supports Microsoft in the antitrust case.

If it’s not a trial balloon many Microsoft critics think the breakup threat is real the company’s proponents aren’t expecting Mr. Gates and Mr. Ballmer to begin speaking in conciliatory language.

“I would assume they would stick to their guns,” said Josh Mathis, executive director of the pro-Microsoft group Americans for Technology Leadership.

That includes appealing the judge’s decision.

“They don’t think they’ve done anything wrong and don’t think any changes to their business practices are warranted. They seem to believe they will be vindicated on appeal,” said Ken Wasch, president of the District-based Software and Information Industry Association, which supports breaking up Microsoft.

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