Justice Department Rejects Most Microsoft Suggestions to Breakup Plan
July 7, 2008 - 8:02 PM
(CNSNews.com) - The Justice Department Monday rejected most of Microsoft Corporation's suggested changes to the government's plan to break up the giant software company into two separate and smaller firms - a plan that Microsoft spokesman Jim Cullinan deemed "excessive and harmful to consumers."
If the Justice Department has its way, Microsoft will be cleaved in half, leaving a "WinCo" firm dedicated solely to the Windows operating system and an "AppsCo" corporation handling everything else currently under the Microsoft umbrella, including Internet Explorer and Windows Office Suite.
The government, in its formal response filed in US District Court before presiding Judge Thomas Penfield Jackson, said that most of Microsoft's recommendations filed last week in response to the DOJ breakup plan were either "unnecessary" or "would undermine or frustrate the purpose and effectiveness" of the proposed remedy to Jackson's April 4 ruling that Microsoft is a monopoly.
While allowing some minor concessions to Microsoft, such as accepting their proposal to legally characterize the breakup as a "divestiture" rather than a "reorganization," the government rejected Microsoft's request for 12 months instead of four months to formulate a breakup plan. Microsoft says it needs the extra time to split the company in two, which the government has requested, while leaving the details of just how to do that up to Microsoft.
Microsoft will be allowed a counter-response on Wednesday, after which Jackson is expected to announce his decision, perhaps within a few days. During the trial, which is now in its third year, Jackson has given strong signals that he is amenable to a Microsoft breakup, and is expected to rule accordingly. If that happens, Microsoft has promised to appeal the verdict.
"While the government's breakup proposal has generated a lot of headlines, it's important to remember that the legal process has far from run its course," said Microsoft CEO Steve Ballmer. "We respectfully disagree with the recent ruling by the federal district court and believe that on appeal the justice system will affirm that Microsoft's actions have been good for consumers and completely within the law."
If Jackson does order a breakup, many legal experts expect the decision to eventually be overturned, either in a US Court of Appeals or the US Supreme Court, but only after a long legal battle.
"There is the possibility of a long process of appeals," said Lars Liebeler, an antitrust counsel for the Computer Technology Industry Association.