Monday April 24, 12:36 am Eastern Time
U.S. said leaning toward Microsoft breakup
WASHINGTON, April 23 (Reuters) - The Justice Department and 19 states are leaning toward asking a court to split up Microsoft Corp (NasdaqNM:MSFT - news) along product lines in a plan designed to end the software giant's monopoly in the U.S. computer industry, two U.S. newspapers reported on Monday.
The Washington Post and USA Today published separate accounts about the proposed solution, each quoting sources familiar with the case.
The drafting of a breakup plan marks a dramatic moment in the two-year lawsuit and only the first time since the 1974 antitrust lawsuit against AT&T Corp (NYSE:T - news) that the federal government has considered such a drastic proposal for a corporate lawbreaker.
Microsoft has vowed to appeal the April 3 verdict that it broke federal antitrust law and the Post quoted a spokesman as saying on Sunday that a breakup remedy would go too far.
``There is nothing in the case that was brought that would merit such an unfounded remedy and one that is not in the interest of the industry or of consumers,' Microsoft spokesman Greg Shaw told the Post.
``It is difficult to know what's being floated as a trial balloon and what is something that all the parties will agree upon,' he added.
Under a Justice Department plan being shared with states and industry executives, Microsoft would be forced to split off the Windows operating system from the rest of the company, both papers reported.
The Windows company would be permitted to include functions that permit browsing of the Internet.
Microsoft then would be forced to spin off a second company that sells its software applications, such as a word processor and the Excel spreadsheet programmes. That company also might get parts of the company that make the Internet browser, the software used to access the World Wide Web, according to the Post's account.
If Microsoft is divided into three companies, sources told the Post, the third would be an Internet company that would get the browser and the Microsoft Network, which is the Internet service provider and Web portal that competes with America Online Inc (NYSE:AOL - news) and other companies.
USA Today noted that a breakup of the company, if upheld by the courts, could take at least two years to implement because of appeals. In the interim, it said, prosecutors would likely ask U.S. District Judge Thomas Penfield Jackson to impose strict curbs on Microsoft's business practices.
The Post quoted Justice Department spokeswoman Gina Talamona as saying she would have no comment on press reports regarding remedies.
The breakup plan was meant to create one or two companies that could sell the bundle of software programmes necessary to spur competition for the Windows operating system, according to the Post.
The new company or companies could either become a competing operating system or license software to potential Windows rivals that now lack the programmes necessary to compete with Microsoft's Windows.
Jackson concluded in his April 3 ruling that Microsoft had abused its Windows monopoly to crush competitors, stifle innovation and harm consumers in the computer industry.
The Post and USA Today said most of the 19 states are expected to join the Justice Department in the draft plan, although some state attorneys general are arguing that the plan is not tough enough and doesn't include strong provisions to rein in Microsoft's behaviour until the breakup is accomplished.
The remedy proposal had not been completed, but was sufficiently far along that government attorneys were writing a proposed order to be submitted to Jackson for his review and sharing the plan with industry officials to search for loopholes, the Post reported.
It said Greenhill & Co., a Wall Street mergers-and-acquisitions firm hired by the Justice Department in December to evaluate and perhaps develop breakup proposals, was playing a key role in the process.
Attorney General Janet Reno was briefed on the proposal last week. White House officials have not been briefed, but such a briefing still could occur.
Jackson will hear oral arguments on a penalty on May 24, after both sides submit written arguments this week.
That means the trial will likely finish this summer.
Microsoft is expected to vigorously fight any breakup proposal and has adamantly denied that busting up the company would boost shareholder value.
biz.yahoo.com |
