May 24, 2000 5:45 PM PDT

Microsoft antitrust ruling expected next week

U.S. District Judge Thomas Penfield Jackson today asked the government to submit a final, revised remedy proposal by Friday, a strong indication that a decision in the Microsoft antitrust trial could come as early as next week.

Today?s missive starts the clock ticking for the software giant. Once the remedy proposal is turned in, Microsoft will have only 48 hours to draft a response, Jackson said. Microsoft representatives said the company would file papers by Tuesday if the government filed by Friday.

The hearing in Washington, D.C. today


Gartner analysts Neil MacDonald and Michael Gartenberg say the judge?s rejection of Microsoft?s request to hold further hearings in the landmark antitrust trial shouldn?t surprise anyone.

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allowed both government and Microsoft attorneys one last chance to present their cases to the court, as Jackson stated that there would be no more hearings. A ruling in the landmark case is expected soon. Nearly two months ago, Jackson indicated that he wanted to end the trial around June 1.

Although Jackson did not say how he would rule, circumstances indicate that he is leaning toward breaking the company into two, and perhaps three, pieces. He mostly focused on the feasibility of a breakup during today's hearing.

The judge in some ways seemed more adamant about the need for a division than did the DOJ. He called a "friend of the court" brief filed by two high-tech trade associations that called for a three-way breakup "excellent" and wondered aloud why the government was only seeking to split the company into two parts.

In a three-way split, Microsoft would be broken into an operating system company, an applications company that would control Microsoft Office and other software, and a third company that would take possession of Microsoft's Internet properties, including MSN.

Jackson further ordered that any revised remedy proposal consider issues that were brought up in court, and left open the possibility of a three-way breakup plan.

But a source close to case said the government planned to stick with a two-company breakup, and, as of this evening, had no plans to go much beyond the original breakup proposal.

Today's events prompted an immediate and stern reaction from Microsoft, which promised to appeal any attempt to break it up.

"We continue to believe that the government's proposed remedies are unprecedented," said William Neukom, general counsel for Microsoft. "At the end of the process, we are confident that we will prevail."

Microsoft's appeal, which seems inevitable, will be wide ranging. Neukom said that the company would appeal the court's findings of fact, issued last year, as well as the court's ruling that Microsoft violated antitrust law.

Microsoft executives, attending a conference today at the company's Redmond, Wash., headquarters, declined to discuss the ongoing antitrust case.

Microsoft is also likely to appeal on the grounds that it was denied "due process," a legal term meaning that the court circumvented Microsoft's opportunity to present its case. The grounds of a due process appeal would be that Jackson set an arbitrary deadline last month when he said he wanted to resolve the case in 60 days.

"Microsoft has a serious due process argument and a stronger one if the judge decides to go for a breakup," said Bob Lande, a professor at the University of Baltimore School of Law.

Breaking the giant: Special Coverage Microsoft offered a remedy proposal that would place limits on its business conduct and dictate how the software giant deals with third-party computer makers and software developers. Under one of its proposals, for instance, Microsoft said it would be willing to sell Windows for the same price to similarly situated hardware manufacturers.

The DOJ and the states dismissed Microsoft's proposals as weak. Lead attorney David Boies argued the case for the DOJ, while Kevin O'Connor, assistant attorney general of Wisconsin, appeared on behalf of the states.

Earlier this year, Jackson ruled that Microsoft violated the Sherman antitrust act by using illegal, anti-competitve means to maintain its monopoly in operating systems.

News.com's Michael Kanellos contributed to this story.

 

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