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[Groop]RE: [molers] news: Judge Orders Microsoft to Split Into Two Firms




> -----Original Message-----
> From: Naim Yunus [Naim_Yunus@totalecom.com]
> [mailto:naim_yunus@totalecom.com]
> Sent: Thursday, June 08, 2000 11:18 AM
> To: molers@egroups.com; mc7377@egroups.com
> Subject: [molers] news: Judge Orders Microsoft to Split Into Two Firms
>
>
>
> Judge Orders Microsoft to Split Into Two Firms
>
> By James V. Grimaldi
> Washington Post staff Writer
>
> June 8, 2000
>
>
> A federal judge yesterday "reluctantly" ordered Microsoft Corp. split in
> two, declaring the software giant an "untrustworthy" monopoly that refuses
> to abandon illegal business practices that crush competitors and harm
> consumers.
>
> In a strongly worded order, U.S. District Judge Thomas Penfield Jackson
> largely accepted the plan by attorneys from the U.S. Justice
> Department and
> 17 states to divide the company and to impose restrictions on its
> aggressive
> behavior until the breakup can be put into place.
>
> Microsoft immediately filed an appeal to delay any restrictions on its
> business and will seek to have the judge's order overturned. Even if the
> company ultimately loses, a breakup could be years away.
>
> The judge's historic ruling sets in motion what would be the
> largest forced
> reorganization of a corporation since the breakup of Standard Oil in 1911.
> It also affirms the government's continued role as a powerful
> referee in the
> marketplace of the information age and, if upheld, would change
> the dynamics
> of the multibillion-dollar software industry and rewrite the
> high-technology
> rules of the road for the 21st century.
>
> "Microsoft as it is presently organized and led is unwilling to accept the
> notion that it broke the law or accede to an order amending its conduct,"
> Jackson said. "There is credible evidence to suggest that Microsoft,
> convinced of its innocence, continues to do business as it has in
> the past,
> and may yet do to other markets what it has already done in the
> PC operating
> system and browser markets."
>
> Under the judge's order, one of the two resulting Microsoft
> companies would
> continue to make and sell the Windows operating system family of products,
> including the monopoly operating system for personal computers. The second
> company would produce software application programs along with the myriad
> other Microsoft business operations.
>
> In an interview with The Washington Post, Jackson said he chose the plan
> because he wanted to avoid the court or government having to set up an
> onerous regulatory scheme to constantly monitor the company's behavior in
> the future. He said he also considered breaking the company into three
> parts. In the end, he said, he chose "the least drastic of the remedies I
> considered."
>
> At Microsoft headquarters in Redmond, Wash., chairman Bill Gates
> vowed that
> the company he co-founded would be redeemed with complete victory
> on appeal.
>
> "Today's ruling really represents an unwarranted and unjustified intrusion
> into the software marketplace," Gates said. "The idea that somebody would
> say that breakup is a reasonable thing comes as quite a surprise
> to us, and
> we are quite confident that it won't be something that ever comes into
> effect."
>
> Gates pledged to challenge both the court's legal conclusions as
> inconsistent with antitrust law and the factual findings.
>
> Attorney General Janet Reno, speaking at a Justice Department news
> conference, pronounced satisfaction with the "strong, effective remedy to
> address the serious antitrust violations that Microsoft has committed."
>
> Justice Department antitrust chief Joel I. Klein, beaming by Reno's side,
> called the decision good news for consumers. "It will stimulate
> competition
> in the PC operating system market and throughout the entire computer
> industry," Klein said. "When the remedy is implemented - and this
> is the key
> point - customers, consumers, in a free and competitive marketplace, will
> decide for themselves what software they want to purchase. Neither a
> monopolist nor the government will dictate that choice."
>
> The judge ordered that the separated companies be barred from
> reuniting for
> 10 years; the operating system company would be required to
> provide both the
> separated company and the rest of the computer industry equal
> access to the
> applications programming interfaces - the part of the operating code that
> allows programmers to write software running on Windows.
>
> In an apparent reference to the 1982 breakup of AT&T Corp.,
> Jackson said the
> remedies proposed have been used successfully in the past and that they
> address the objective required under law, "namely, to terminate
> the unlawful
> conduct, to prevent its repetition in the future and to revive competition
> in the relevant markets," Jackson ruled.
>
> The judge said Microsoft's counterproposal, which involved a series of
> less-drastic restrictions on its conduct, "is plainly inadequate in all
> three respects."
>
> Government antitrust lawyers envision that the operating-system
> company will
> design its product not so that it favors Microsoft applications,
> but so that
> it offers all independent software developers equal access to distributing
> their products on the program that runs nine out of ten of the world's
> personal computers.
>
> The second applications company, the government postulates, could
> become an
> instant competitor that would sell its products ranging from word
> processors
> to spreadsheet programs to both the old Microsoft operating system company
> but also to competing operating system platforms. But Microsoft predicts
> chaos in the computer industry: Innovation would be stifled, consumers
> harmed and the two divided companies doomed to fail because of overly
> onerous restrictions imposed on both companies.
>
> Within four months, Microsoft must outline the reorganization of
> the company
> into two pieces under the broad outlines described by the government, the
> judge ruled. Microsoft had sought a year for the plan. Now the
> company will
> appeal that decision too.
>
> While the appeals process is moving forward, Microsoft was
> ordered to follow
> a series of tough restrictions on its business practices. In three months,
> Microsoft would be required to share equally with the computer
> industry its
> applications programming interfaces.
>
> Microsoft argues that the publication of this code is an undue and
> irreversibly damaging confiscation of the company's intellectual property
> rights and should be put on hold until the appeals are complete. The
> government responds with the judge's findings that Microsoft used
> access to
> the code to hurt its competitors and help its allies.
>
> Microsoft also will seek an emergency hold on an order requiring that
> computer makers be given more flexibility in the way they configure the
> Windows operating system. The company contends that this would
> let computer
> makers damage their Windows product and hence create more cost in service
> calls and harm the product's reputation when it breaks down.
>
> In his order, Jackson said the restrictions were necessary because
> Microsoft's credibility is in doubt. The judge pointed to an incident
> involving an earlier consent decree case when the company, which
> he ordered
> to separate its Internet Explorer Web browser from the Windows operating
> system, gave a "disingenuous" explanation about why it hadn't done so.
>
> "Microsoft has proved untrustworthy in the past," Jackson wrote.
> "Microsoft's purported compliance with that injunction while it was on
> appeal was illusory and its explanation disingenuous."
>
> Jackson, in his ruling, said he gave great deference to the government's
> proposal for breakup. "Plaintiffs won the case, and for that reason alone
> have some entitlement to a remedy of their choice," Jackson said. The
> federal and state antitrust attorneys "are by reason of office obliged and
> expected to consider - and act in - the public interest;
> Microsoft is not."
>
>
>
> © 2000 The Washington Post Company
>
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