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VNU Net: DoJ wants Microsoft split in half

Apr 30, 2000, 16:03 (3 Talkback[s])
(Other stories by John Geralds)


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By John Geralds, VNU Net

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 marketplace."

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 Microsoft's favour."

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 company's wishes.

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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