Government's final proposal as expected

By Clare Haney
IDG News Service, 05/26/00

The U.S. Department of Justice on Friday filed its final proposal for remedies in the Microsoft antitrust case. As expected, the proposal included only minor changes, with the government sticking to its earlier recommendation to split Microsoft into two companies.

With Microsoft ordered by the court to submit its proposed final judgment next week - most likely Wednesday, given the Memorial Day holiday on Monday - the way is now clear for the judge to enter his final decree in the case as early as Thursday.

Speculation had been raised about how much the final remedy proposal would differ from the plan that the Justice Department submitted late last month, particularly in relation to the proposed cleaving in two of Microsoft into an operating systems company and an applications company.

On Wednesday, the judge in the case - U.S. District Court Judge Thomas Penfield Jackson - indicated an interest in a friend-of-the-court brief filed by the Software & Information Industry Association (SIAA) and the Computer & Communications Industry Association (CCIA). The brief suggested that Microsoft be broken into three pieces with one entity focused on operating systems, a second on Internet applications and a third on other applications.

However, Friday's filing, along with a memorandum in support of the revised proposed final judgment, doesn't significantly deviate from the remedy proposal submitted late last month.

Among the changes mentioned in the memorandum about the filing is a clarification that if Microsoft were to be split in two, the pair of companies wouldn't be prohibited from licensing technologies, excluding middleware products, to each other "on a nondiscriminatory basis for use in the other's product if such technologies are not offered as separate products."

The Justice Department in the memorandum criticized Microsoft's filing of a 35-page "Order of Proof" document at the end of Wednesday's court hearing. The court filing is aimed at supporting the software giant's contention that it didn't have enough time to be heard about the remedy issues.

"Microsoft has not... engaged responsibly on those issues," the Justice Department said in its filing. "To the contrary, its 11th-hour submission of the Order of Proof appears to be just a cynical ploy calculated to raise diversionary issues on appeal."

The software maker has had plenty of time to put forward its take on the government's breakup proposal, the Justice Department said. Filing the Order of Proof at Wednesday's hearing was inappropriate, since the hearing was concerned with determining the merits of the remedy proposals from both sides.

Microsoft kept the Order of Proof "secreted in its briefcases," only producing it when the judge said he was not considering any further process and then set up a schedule for a form of final judgment, the department said.

"A party that was genuinely interested in having discovery or further proceedings would not have behaved that way," the department said in the memorandum to its filing. "It would have made timely and specific requests for more process; it would have attempted to show good cause for continuance; and, if it had evidence or even a bona fide offer of proof, it would have submitted it when process issues were discussed. It would not have waited until the conclusion of the hearing."

Jackson on Wednesday rejected a Microsoft plea that the company be allowed more time to prepare a defense to the government's proposal to split the software vendor in two. Jackson, who gave strong indications that he's all for splitting the company, also dismissed Microsoft's request for summary judgment, which asked the judge to immediately dismiss the breakup plan.

The Justice Department and 17 state attorneys general who are plaintiffs in the case have not only called for Microsoft to be split into two, but also are seeking behavioral remedies aimed at stopping Microsoft's anticompetitive business practices. Two other state attorneys general have recommended only behavioral remedies.

Microsoft on Friday announced that it has rescheduled its planned Forum 2000 event next week, due to the likelihood that the judge will enter his final decree in the antitrust case.

Forum 2000, which is designed to flesh out the details of Microsoft's Next Generation Windows Services (NGWS), was due to take place Thursday at the software giant's Redmond, Wash., headquarters. The event is now rescheduled for June 22.