UPDATE 1-U.S. states to urge Microsoft be split up
Thursday April 27, 11:56 pm Eastern Time
(Adds details from Post, final 4 paras)
By David Lawsky
WASHINGTON, April 27 (Reuters) - The Justice Department and U.S. states Friday will urge a federal judge to invoke a rarely used power under the nation's antitrust laws and split up Microsoft Corp.(NasdaqNM:MSFT - news), aiming to end its abuse of monopoly power.
Federal District Court Judge Thomas Penfield Jackson will consider the filing and the software giant's response in preparation for a hearing on remedies May 24. He set Friday as the day for the government to give him its proposal.
Jackson ruled early this month that Microsoft ``placed an oppressive thumb on the scale of competitive fortune, thereby effectively guaranteeing is continued dominance in the relevant market,'' harming competitors, consumers and other competitors.
The government proposal would split Microsoft into one company that manufactures operating systems and a second that makes everything else -- in particular, the dominant Microsoft Web browser, sources close to the case said.
The company strongly defends its actions as legal and has promised to appeal the judge's ruling.
Microsoft Chairman Bill Gates said earlier this week that his company ``has done absolutely nothing wrong'' and condemned the government's approach, saying it amounted to a blanket rule that, ``You're not allowed to innovate.''
For the most part, state and federal officials have not responded to such remarks but on Thursday New York State Attorney General Eliot Spitzer answered back.
``It was Microsoft -- not the government -- that has suppressed innovation,'' Spitzer said.
Jackson found that Microsoft has erected barriers to competition. Microsoft takes a different view.
Microsoft President and Chief Executive Officer Steve Ballmer said this month: ``I don't think there is a barrier to entry where people can't come in ... I do see a competitive marketplace.''
Spitzer disagreed, saying it was ``astonishing to me that (Gates and Ballmer) continue to to ignore the case that the states and federal governments have proved in court.''
``These statements are contrary to the facts,'' he said.
Microsoft will have its chance to reply on May 10 and the government will file once again on May 17.
Jackson may reach a decision this summer or in October, experts speculate.
The two companies carved out of Microsoft wouldn't be able to recombine their efforts for 10 years, the Washington Post reported in Friday editions, quoting sources who had seen the government's plan.
Other provisions, aimed at limiting Microsoft until competition can be jump-started in the marketplace, would impose three-year restrictions on the operating-system company allowing computer makers more flexibility to feature rivals' products, the Post reported.
The plan would require Gates and his board of directors to put together a proposal for implementing the breakup, including how to divide up intellectual property rights such as patents and copyrights.
The company would decide which of the new entities would retain the Microsoft name, and Gates and other officials would receive stock in only one of the companies, the Post said. Ordinary shareholders would get stock in both entities. |
