CNN: Industry Group Endorses Microsoft Breakup (FYI)
Special Report: Antitrust
March 4, 1999
Web posted at: 10:59 a.m. EST (1559 GMT)
WASHINGTON (AP) -- In a significant new twist to the landmark Microsoft antitrust case, one of the computer industry's most prominent trade groups is endorsing the breakup of Microsoft Corp. in a secret 40-page report circulated among its board and sent to government lawyers.
The Software and Information Industry Association proposed what some legal experts describe as the "death-penalty" for Microsoft -- splitting it up into companies selling separate products, such as Windows software, business programs and Internet content, or breaking it up into three or four "Baby Bills" or "Mini-Microsofts" each with identical product lines.
It said a mandatory breakup of Microsoft "deserves the most careful attention of the government and the court." But it doesn't distinguish which breakup plan it recommends, calling it a "Hobson's choice" and "ultimately an antitrust policy question with no clear answer."
The breakup proposal by the trade association is significant because Microsoft is one of the biggest companies in the 1,400-member group, formerly known as the Software Publishers Association. Its board includes executives from Netscape, Oracle Corp., IBM Corp., Symantec Corp., as well as Dow Jones & Co. and Reuters.
The Washington-based group "concludes that a structural reorganization of Microsoft can avoid the drawbacks associated with conduct-based, behavioral relief," such as constant government oversight and the risk that Microsoft might find loopholes in any restrictions imposed by a judge.
The group's executive director, Ken Wasch, declined to comment about the report, which was obtained by The Associated Press.
Microsoft has said previously that it's premature to consider what remedies it could face, and has argued it's not losing at trial.
It's unclear whether the industry group's breakup proposal will be persuasive to government lawyers, who have indicated they are looking at a range of possible remedies to recommend to the judge if they win their lawsuit.
In a speech scheduled for later today on the Senate floor, Republican Slade Gorton of Washington criticized government lawyers even for pondering remedies.
"Before they have even won their case, Mr. President, antitrust division officials are contemplating punishments," Gorton wrote in a draft of his speech. "Before they have proven any consumer harm, they are devising consumer remedies. ... What happened to letting Justice take its course?"
If it loses, Microsoft's future could include behavioral restrictions, such as limits on deals with computer makers and Internet companies. It agreed to rescind some of those limits last year shortly before Gates testified during Senate hearings in Washington.
Government lawyers acknowledge they also are seriously considering a requirement that Microsoft allow other companies to modify Windows sell it themselves, so-called "compulsory licensing."
If it wins, the government has urged the judge to organize a special hearing to consider Microsoft's fate. In its lawsuit filed last May, it asked him to outlaw some of Microsoft's contracts, and asked him to force Microsoft to ship Netscape's rival Internet software in Windows or allow computer makers not to distribute the company's own browser.
But that "must-carry" proposal was widely seen as made moot after America Online's decision to buy Netscape for $4.2 billion, because AOL could choose to distribute Netscape's software to its more than 16 million subscribers, more than any other Internet provider.
Copyright 1999 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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