Judge grants more time to government in Microsoft anti-trust case

By Mike Ingram
2 June 2000

In an unexpected move Thursday, the US government asked for more time in the anti-trust trial against Microsoft, saying that it might incorporate several of the suggestions made by the company into its proposal to split Microsoft in two.

District Judge Thomas Penfield Jackson gave the government until Monday, June 5 to deliver its observations on Microsoft's latest filing, which attacked the break-up proposal and requested more time for the implementation of conduct restrictions.

According to an official court transcript, government lawyer David Boies said in a telephone call with the judge and Microsoft, "Some number of [the suggestions] seem to make some sense to us, and we would like the opportunity to go through those in detail and to give the court our view on that."

Antitrust chief Joel Klein told reporters in New York that only a few of Microsoft's suggestions would be incorporated. "We requested the opportunity to analyse those suggestions and there may be a few that are acceptable to us," Klein said.

The government's decision to ask for more time seems to have been driven by concerns over the appeals stage of the judicial process, where Microsoft is expected to get a more friendly hearing. Boies said the government wanted to explain briefly why it disagreed with many of Microsoft's suggestions, rather than let the company's critique go unanswered. Microsoft had also indicated that it would claim denial of due process when the case came before the appeals court.

A hearing on the proposed remedies in the Microsoft lawsuit held May 24 indicated that Judge Jackson would like to rule in favour of a break-up of the company at the earliest opportunity. In the run-up to the hearing, Microsoft had repeatedly said it would ask for a delay until December to prepare its legal defence against break-up proposals put forward by the Justice Department and 17 of the 19 plaintiff states.

Microsoft lawyers were shocked to hear Jackson declare after only three hours of hearings, "I'm not contemplating any further process." When Microsoft lawyers again appealed for more time, the judge snapped, "This case has been pending for two years now."

Jackson then asked the plaintiffs to "present me with a clean copy" of their break-up plan by the next day, May 25. Ignoring protests from Microsoft attorney Steven Holley, Jackson gave Microsoft until May 31 to present its response to the new government filing.

Indicating he may favour going further than the government proposal to separate Microsoft's Windows operating system from the company's Office applications and Internet business, Jackson pressed the government on whether this approach would only lead to two new monopolies. He spoke approvingly of an alternative plan, submitted by industry trade groups opposed to Microsoft, that would back a three-way break-up, with a third spin-off company based on Microsoft's Internet software products and services.

The lead trial counsel for the Justice Department, David Boies, said that a three-way break-up had been considered, but rejected as inefficient, disruptive and possibly harmful to consumers.

While acknowledging that the groups filing the alternative proposal, the Computer and Communications Industry Association and the Software and Information Industry Association, were Microsoft's competitors, Jackson called the filing "an excellent brief".

Supporting calls by the government for additional restrictions on Microsoft's conduct to ensure fair competition during any appeals process, Boies disclosed two emails written by Microsoft Chairman Bill Gates which he said demonstrated the company's inclination to continue to use its monopoly power to thwart competition.

The new documents, which are stamped "confidential", detail efforts by Gates to get makers of hand-held computing devices to embrace a scaled-down version of Windows. In one email, Gates suggests that Microsoft should change some of its desktop software so that some new features "only run on our PDAs" [Personal Digital Assistants]. Gates argues that this might sway a maker of mobile phones to choose Microsoft software.

In a second email to some of his top employees, Gates laments that cellular phone manufacturer Nokia has joined a consortium called Symbian PLC to develop technology for "smart" mobile phones. Gates complains that Symbian would promote the Java programming language produced by Microsoft rival Sun Microsystems. "Using Sun is just declaring war on us," Gates says.

He adds, "If either of these things are the case, then these guys are really at [war] with us and we should do the most extreme things we can. This may mean not working with them in some of the other areas," such as cable set-top boxes.

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