- The Washington Times - Thursday, May 25, 2000

The federal judge in the Microsoft antitrust case yesterday gave the Justice Department two days to revise its plan to break up the software giant and rejected the company's pleas for more time to respond.
U.S. District Judge Thomas Penfield Jackson ordered that revisions be based on issues raised in yesterday's hearing, including the possibility of splitting Microsoft into three new companies, rather than two as the government has proposed.
Under the Justice plan, one company would sell operating systems and the second would develop and market Microsoft's popular Office software and Internet properties. The hearing explored an additional option: a third company based on Microsoft's Internet Explorer Web browser.
Judge Jackson dismissed a request from Microsoft that he hear evidence in the matter. "I contemplate no further process," he said.
"This case has been pending for two years now," Judge Jackson snapped when company lawyers pleaded for more time. Microsoft apparently will have until Tuesday to respond to the government's updated plan, which is due tomorrow.
Judge Jackson said he will decide what punishment to impose after reviewing the government's updated plan and Microsoft's response. He ruled in early April that Microsoft had engaged in business practices that violated antitrust laws. The company has said it will appeal the case.
David Boies, the Justice Department's special trial counsel, said that plan would "take into account the day's proceedings." He did not say if it would include the three-way breakup.
Also discussed yesterday was whether Microsoft's newest operating system, Windows 2000, is compatible with other operating systems and whether Microsoft should release the computer source code for its products to its partners and competitors. Microsoft said that would cost the company billions.
William Kovacic, an antitrust expert at George Washington University's School of Law, said a quick decision on breaking up Microsoft would provide fertile ground for appeal.
"I don't understand it. Clearly, he has a keen sense to wrap this up, and that he is emphasizing speed over process," Mr. Kovacic said. "But if you step back for a second, this will be one of the two or three most important corporate restructurings in the United States. Isn't it worth taking a couple of months to get it right?"
The company's general counsel, William Neukom, said Judge Jackson's action moves the case "very near" to the U.S. Court of Appeals for the District of Columbia Circuit.
"On appeal, Microsoft will be raising challenges to the procedures used throughout the trial, including the remedies phase," he told reporters outside the courthouse.
The appeals courts, which ruled in Microsoft's favor in a related case in 1998, is expected to be friendlier to the company.
"We look forward to the appellate's scrutiny," Microsoft attorney John Warden said.
Earlier yesterday, Judge Jackson wondered aloud whether he could simply send the case to the appeals court without imposing a punishment on Microsoft.
"Why can't we just defer that until the court of appeals has had a crack at it?" Judge Jackson asked Mr. Boies, who cited federal laws that a final order, including a remedy, must be signed before a case can move to an appeals court.
Judge Jackson also questioned the wisdom of splitting the company in two, in effect creating "two separate monopolies. Tell me how that would effectively inspire competition?"
The Justice Department and 17 of the 19 states that filed the initial antitrust complaint against Microsoft want to create two new and distinct companies.
Department lawyer Kevin O'Connor said those businesses would encourage Microsoft to compete fairly.
Judge Jackson then talked about a brief submitted by the Software and Information Industries Association and the Computer & Communications Industry Association, who proposed creating an applications company, a Windows operating systems company, and another that included Microsoft's Internet businesses, such as Microsoft Network.
"It's an excellent brief," the judge said.
Mr. Boies agreed, but said a two-way split would be quicker and would minimize damage to the industry and the economy.
Judge Jackson found last month that Microsoft engaged in anti-competitive behavior and that Microsoft violated federal antitrust law by using illegal methods to protect its monopoly in the computer operating systems. The company also tried to expand its dominance into the market for Internet browsers, Judge Jackson found.

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