The US Justice Department and 19 states have asked a federal
judge to slice Microsoft in half as punishment for the software
giant's antitrust violations.
One company would sell the Windows operating system while the
other would handle applications software, including Microsoft
Office, as well as Internet Explorer, the product at the centre of
the legal turmoil. Also the two companies would not be able to
re-unite for another 10 years.
A proposal for implementing the split would be the
responsibility of Microsoft chairman Bill Gates, and his board.
Attorney General Janet Reno, said: "This is the right remedy for
the right time. Our proposal will stimulate competition, promote
innovation and give consumers new and better choices in the
In a quick fire response, Gates said: "Consumers should
understand that these remedies would not allow us to deliver
software products as we have in the past. These regulations do not
help the software industry in any way. They simply retard the speed
at which it can move ahead."
He added: "We are confident that the appeals court will rule in
A breakup is not imminent and the government still faces a
battle that could go on for much longer. The remedy would likely be
stayed pending appeals that could take a year or more. After remedy
proceedings next month, Microsoft might ask for a review by a
federal appeals court.
The 17-page proposal, submitted to US District Judge Thomas
Penfield Jackson, also asked for immediate and sweeping
restrictions on Microsoft's conduct to protect competition during
any appeal. These restrictions range from imposing three year
limits on the Windows company to give computer makers more
flexibility to include rival products, to Microsoft being banned
from retaliating against business partners that have resisted the
Richard Blumenthal, Connecticut Attorney General, said: "This is
a very measured but responsible remedy."
Rob Enderle, an analyst at Giga Information Group, said
Microsoft must put this behind it and do so fairly quickly.
"During the interim period it is not clear what Microsoft's
direction is. The indecision will do bad things to its market cap,
employees and partners. This puts Microsoft in a tailspin position,
a spiral as things get worse," he said.
Whatever the proposal and remedy, Microsoft has consistently
vowed it will appeal. Jackson will rule on what punishment should
be imposed on the company based on the government's filing,
Microsoft's response and a hearing scheduled for 24 May.
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