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The BBC's David Willis in Seattle
"It's prepared to fight all the way t the Supreme Court"
 real 28k

Thursday, 11 May, 2000, 06:29 GMT 07:29 UK
Microsoft's proposals 'ineffective'
Microsoft founder Bill Gates
Bill Gates says break-up plan would have "chilling effect"
The US Justice Department has dismissed proposals by Microsoft aimed at remedying its anti-trust violations as "ineffective and filled with loopholes".

The Microsoft Trial
Microsoft had argued that breaking up the company would be too severe a punishment and that the issues involved did not warrant "such a radical step".


The proposal fundamentally fails to repair the damage to competition caused by Microsoft's illegal acts

US Justice Department

It asked the judge to scrap the break-up plan and delay any decision until December, suggesting instead that it could allow competitors greater flexibility in offering non-Microsoft software with its Windows operating system.

But the Justice Department said of Microsoft's plan: "It would not prevent Microsoft from engaging in many of the illegal acts found by the District Court.

"Nor would it prevent the company from using its monopoly power in the future to engage in the same kind of illegal behaviour to crush new innovations."

Microsoft fights back

Earlier, the software giant had said the judge in the anti-trust trial should dismiss the break-up plan as "unprecedented and wholly inappropriate," and vowed to fight any decision on appeal.


These proposals would destroy or hobble an American company that is a model of success in the high-technology arena

Microsoft

"Microsoft is making a proposal to the judge at his request for a set of remedies which we believe are responsive to the issues that this judge has found ... and would allow our industry to move forward in the aggressive, positive way," chief executive Steve Ballmer said.

"Our company will not be broken up. It will not happen," he told an industry conference.

Both sides are arguing over what "remedies" should be imposed on Microsoft, after a District Court judge found the software maker guilty of abusing its monopoly power and breaching anti-trust legislation.

What happens next
17 May: Government response

24 May: Judge holds "remedies" hearing

US government lawyers have already put their submission forward to split Microsoft up into two companies, one of which would develop the Windows operating system for personal computers, and one which would manage Microsoft's other software products, such as Excel and Word.

However, Microsoft has already said it will appeal against the verdict, regardless of what sanctions the judge decides to impose.

Split will 'unleash competition'

The government believes that only by splitting up Microsoft can the courts be sure that the company will not restrict competition in the future.


We believe that the proposed divestiture in the Microsoft case ... would produce substantial innovation and competition in the software business

Joel Klein, Department of Justice
Assistant Attorney Joel Klein, the man in charge of the anti-trust division of the Department of Justice, defended this approach, comparing it to the break-up of phone company AT&T into a long-distance carrier and numerous local "Baby Bells".

He noted that the AT&T break-up had "unleashed unprecedented competition, innovation and consumer benefit".

Microsoft has already argued that the government's plans "would do significant harm to innovation, the high-tech industry and consumers".

'Don't rip us apart'

In its submission, Microsoft argues that the government proposals would "rip it apart" and amount to unwarranted confiscation of its "crown jewels" - the code for its Windows operating system.

Microsoft has promised to modify its behaviour and proposed "remedies" of its own that would not require it to be split up. These include:

  • Allowing manufacturers to delete the Microsoft Explorer icon from the start-up screen and to display icons for non-Microsoft products
  • Preventing Microsoft from entering into licensing agreements for Windows-based products on an understanding that the other party limit distribution of rival software
  • Barring Microsoft from denying any independent software developer complete access to technical information it makes available to the software community at large
  • Prohibiting the company from withholding the release of any software product designed to run on a non-Microsoft platform in order to limit competition to Microsoft.

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See also:

28 Apr 00 | Business
Microsoft 'should be split in two'
29 Apr 00 | Microsoft
Microsoft break up unlikely
25 Apr 00 | Business
Microsoft shares plunge
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Poor Bill Gates
04 Apr 00 | Business
Microsoft vows to fight on
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Microsoft penalty in 60 days
08 May 00 | Microsoft
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