Feds set sights on Microsoft bust-up
By Thor Valdmanis and Paul Davidson, USA TODAY
After several failed attempts to settle a nasty antitrust battle out of court, the government is refocused on breaking up software giant Microsoft.
Senior officials at the Justice Department have approached at least two leading technology investment banks in recent days, requesting a detailed analysis of how best to break up the world's most valuable company - a complex study that could cost hundreds of thousands of dollars.
Bankers at the two firms, who requested anonymity, said Justice officials wanted an assessment of where the logical breakup points of Microsoft were and a valuation of what the market reaction would be. Both firms declined, worried about the impact of siding with a Justice Department that they say is viewed in the business community as interventionist.
News that Justice is seriously considering breaking up Microsoft will take analysts by surprise because many believed only the states involved in the lawsuit were pushing for it.
"We have made preliminary inquiries to experts that might assist us in evaluating an array of remedy options if the court ultimately rules in our favor," says Justice spokeswoman Gina Talamona. She said "it's premature" to discuss sanctions.
After eight months of technical testimony and hundreds of e-mail exhibits, Justice and Microsoft finished presenting their cases in the trial last month. Closing arguments are slated for September, and a ruling is expected later this year. If Microsoft is found liable, as many observers expect, a hearing to determine the proper remedy could follow. But any sanctions U.S. District Judge Thomas Penfield Jackson hands down could be delayed for years by appeals.
"If the government were to seek breakup as a remedy, it would face the argument that whatever may make sense as a matter of economic theory would not make sense as a business reality," says antitrust lawyer Richard Steuer, a partner at Kaye Scholer.
Microsoft spokesman Jim Cullinan would not comment on a possible breakup, saying: "Remedies are not something we're focused on. We believe the facts will show we competed fairly."
Some competitors wonder if two or more Microsofts might be worse than competing against one. But a breakup, depending on how it's done, could be good for investors. Just look at the post-breakup success of AT&T.
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