Looking to smash the Microsoft Corp. monopoly in the same way it did AT&T Corp. 16 years ago, the Department of Justice and 19 states as expected last month asked U.S. District Court Judge Thomas Penfield Jackson to split Microsoft into two competing companies.
The proposal recommended that Microsoft be split into one company focused on the Windows operating system and the other on software applications such as Office and Internet Explorer, the Web browser that was at the heart of the antitrust case filed nearly two years ago.
The government will also seek behavioral remedies that will restrict the company’s business practices during an appeals process. The Justice Department also asked that the two new companies be barred from reuniting for 10 years, and that Chairman Bill Gates and other executives be barred from owning stock in more than one of the new companies.
The last major government-induced corporate breakup was in 1984 when AT&T was deemed a telephone monopoly and divided into eight companies.
Microsoft responded to the ruling quickly.
“For months, the government and a handful of our competitors have been repeating that Microsoft should be broken up. But no matter how many times it’s repeated, it’s still unreasonable,” said Steve Ballmer, Microsoft president and CEO in a statement. “I remain proud of the work this company does. We do not believe we have violated the law, and the Court of Appeals has yet to consider this case. We also believe we have an obligation to our shareholders, employees, partners and customers to stand up for what we believe is right.
“Microsoft has exciting plans to develop a broad array of next-generation software products that will take computing to the next level, but those plans are imperiled by the extreme regulation proposed by the government,” Ballmer added.
Attorney General Janet Reno also told the Associated Press: “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.”
Jackson can now accept all, part or none of the proposal.
At press time, Microsoft was scheduled give its response and present its own proposal on May 10. The Justice Department was slated to respond to Microsoft’s proposal on May 17.
On May 24, Jackson will hold a formal hearing in Washington, D.C. before retiring to draft his ruling, which could take a few weeks.
