Posted at 11:12 a.m. PDT Wednesday, May 24, 2000
Judge considers
arguments for breaking
up Microsoft
BY DAVID L. WILSON
Mercury News
In an electrifying series of questions that left stunned
spectators wide-eyed, Judge Thomas Penfield Jackson
telegraphed the fact that he is seriously considering
breaking up Microsoft Corp. Jackson's chief concern
during the oral arguments this morning in Washington
appeared to be whether the government's proposal to split
Microsoft into two companies would be tough enough.
The government has suggested that Jackson break
Microsoft into two companies. One company would
control the Windows operating system, another would
control commercial programs, like its Office suite of
software. Early in Wednesday's proceedings, Jackson
interrupted the government's presentation, questioning the
proposal. `The effect of a bisection will in effect create
two separate monopolies,` he said.
David Boies, who is pressing the government's case, said
the government had considered breaking up the company
in such a way that the resulting companies would be able
to sell all of Microsoft's products, the operating system
and applications. This type of restructuring would
instantly create competition in the market for the
operating systems. Jackson nodded his approval and
asked Boies, `Why aren't you doing that?` Boies
responded, `Two reasons, your honor.`
Boies said that the creation of `Baby Bills,` as the
proposal has come to be known, might be more likely to
have disruptive effects on the industry and consumers. In
addition, he said, the government believes that the
operating system and applications development split it is
proposing directly addresses the issues established during
the case.
Jackson appeared to be convinced by the government's
arguments, though he did say that he was impressed by an
amicus brief suggesting Microsoft should be split up into
three companies: operating system, applications and the
Internet Explorer Web browser. The 67-page brief was
submitted by the Computer & Communications Industry
Association and the Software and Information Industry
Association. Boies quickly endorsed the concept, saying,
`That has a lot of advantages to it.` He told Jackson that
the government had considered making just such a
proposal, but had decided on the two-company split in an
attempt to keep things as simple as possible. Jackson
replied, `This is anything but simple.`
Microsoft's lead attorney, John Warden, denounced the
break up proposal as `Draconian,` `unwarranted` and
`radical.` He insisted that the government -- and even the
judge himself -- had failed to meet the legal standard
necessary to consider a `structural` remedy such as a
breakup.
`Every link in this chain is speculative,` he thundered.
An apparently bemused Jackson asked Warden to cite the
precedent for his claim that the legal standard had not
been met. Warden started to recite a series of previous
court cases, but Jackson interrupted him, saying the cases
did not support his claim. Warden said, `There is no case
that directly addresses that point.` Jackson smiled and
said, `I didn't think so.`
Warden, insisted, however, that breaking up the company
would not be a remedy for any violations of antitrust law
committed by Microsoft. `Relief must not be punitive,` he
said. `This relief can only be so classified.`
Court will resume after a lunch recess.
sjmercury.com
Posted at 11:18 a.m. PDT Wednesday, May 24, 2000
Gates e-mails once again
turn up in court
WASHINGTON (AP) -- While arguing Wednesday for
their proposal to break up Microsoft Corp., attorneys for
the Justice Department revealed two new e-mails by
company chairman Bill Gates which, they contend,
show Microsoft's continuing efforts to dominate the
software market.
The first e-mail, from Gates to a select group of managers and executives, deals
with wireless, handheld computers and personal digital assistants. Gates urges his
managers to make changes in the Microsoft Outlook e-mail program to aid the
adoption of Microsoft's line of handhelds instead of the popular Palm Computing
Inc. models.
``We really need to demonstrate ... why our PDA will connect to office in a better
way than other PDAs, even that means changing how we do flexible schema in
Outlook and how we tie some of our audio and video advanced work to only run
on our PDAs,'' Gates wrote.
Government trial lawyer David Boies said the e-mail -- dated July 11, 1999, after
testimony in the antitrust trial wrapped up -- was evidence that Microsoft planned
to use its monopoly power to promote new products at the expense of competitors.
Microsoft argued the e-mail was taken out of context.
``It wasn't a question of interfering with Palm. That e-mail was designed to show
the benefits of Microsoft's architecture to Nokia,'' said Rick Rule, the former
Justice Department antitrust chief who now works as a consultant for Microsoft.
``It certainly doesn't tell the whole story.''
The other e-mail deals with Nokia Corp. and its work with Symbian, a joint
venture to develop a Web browser for wireless devices like cellular phones and
handhelds. In that e-mail, dated June 28, 1998, Gates expressed concern over
Symbian and Nokia working with technologies from rival Sun Microsystems.
``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,'' Gates wrote, again to top
managers. ``This may mean not working with them in some of the other areas like
set top (television boxes), phoenix (a codenamed project inside Microsoft) etc.''
Rule dismissed the DOJ's use of more Gates e-mail as showy and irrelevant.
``These e-mails were never entered into the record during trial,'' Rule said.
``There's no way that they can be the basis for anything like what the Justice
Department is asking for.''
sjmercury.com |
