Originally created 05/24/00

Microsoft, DOJ head back to court



WASHINGTON - Microsoft returns to court Wednesday, hoping to get an indication of how seriously a federal judge is considering a government plan that would break up the software giant as a remedy for breaking the law.

Microsoft will face a bevy of government attorneys during a hearing scheduled before U.S. District Judge Thomas Penfield Jackson, who oversaw the 78-day antitrust trial in a case brought by the Justice Department and 19 state attorneys general.

Last month, Jackson ruled that Microsoft violated federal antitrust law by using illegal methods to protect its monopoly in the computer operating systems. The company also tried to expand its dominance into the market for Internet browsers, the judge found. Microsoft plans to appeal the ruling.

The hearing Wednesday is intended to help Jackson determine the best remedy to impose against Microsoft to restore competition in the software industry.

The Justice Department, along with 17 of the 19 states, is urging Jackson to split Microsoft into two companies. One would develop the Windows operating system, which dominates the personal computer market worldwide and was found by Jackson to be the source of Microsoft's monopoly. The other company would run everything else Microsoft operates, including its Office software and Internet services.

Microsoft believes the government lacks a basis for its proposed breakup. The Redmond, Wa.-based company has asked Jackson to summarily dismiss the government proposal, or at least give its attorneys up to six months to prepare a legal defense against such a "severe" punishment. Microsoft also has offered numerous milder penalties in its place.

On Wednesday, each side in the case will get about two hours before the judge to argue its case, with attorneys for the Justice Department going first.

Legal antitrust experts expect Jackson to grant Microsoft some, but not all, of the additional time it wants.

"What the government is requesting is the restructuring of what may be the world's most important company," said Bill Kovacic, an antitrust expert at George Washington University. "Is it worth taking a few additional weeks, maybe a couple of months, to get that right? I think he (Jackson) will conclude that it is."

What other actions the judge may take is uncertain. When he originally sketched out the current timetable, Jackson indicated that he hoped the hearing would wrap up the remedy phase of the case, and he would "simply write his own order shortly after that," Kovacic said.

"I think what we'll principally see now is the debate about how much more time this should take, and what specific activities the judge should authorize," he said.

Jackson may also show signs of his willingness to accept the government's breakup proposal, many experts believe.

"Whether he's open to a structural remedy - I would expect Jackson to give some indication of how he's leaning," said Bill Kolasky, who heads the antitrust division of a Washington law firm hired by a pro-Microsoft trade group.

Kovacic agreed.

"I think he has to indicate whether it is a genuine candidate or whether he's willing to dismiss that out of hand," he said.