WASHINGTON -- The government is considering a plan to strip Microsoft Corp. of the rights to one of its most valuable assets, its Internet Explorer browser software, as part of a sweeping remedy in the landmark antitrust trial, people close to the case said.
Under the proposal,
State and federal officials haven't decided whether to include the proposal in their recommendations to the court. But it is clear the restrictions on Microsoft's conduct now under discussion, while falling short of an outright breakup, will be tougher than Microsoft might have won in failed settlement talks two weeks ago.
While no final decision has been made, state and federal officials are leaning against a breakup in part because of a sense of urgency to get a strong remedy in place as soon as possible. A breakup would be more likely to be delayed or overturned on appeal, leaving Microsoft's power intact at a critical point in the development of the Internet as it begins to transform the economy.
The proposal to strip Microsoft of its intellectual property is designed to work only in combination with restrictions that protect rival software developers and empower PC makers to choose what software to load on new PCs. Because of the extraordinarily tight schedule Judge Jackson has proposed, state and federal officials already are circulating some provisions in the computer industry.
Also on the table as these deliberations intensify this week are possible restrictions on Microsoft's other lines of business, including the lucrative Office software suite and its Windows 2000 "server" software aimed at corporate networks and Internet sites.
In a speech Friday before the American Bar Association, Joel Klein, the Justice Department antitrust chief, said that any remedy must keep up with the rapid pace of change in the industry so that "yesterday's problem won't be replicated as tomorrow's problem." He declined to comment further.
A Microsoft official said the government doesn't understand the company's business and the competitive threats it faces. He expressed confidence in Microsoft's case on appeal and said parts of the judge's ruling favorable to Microsoft, which rejected the government's claim that rivals were kept out of the market, amount to "a torpedo below the water line" to the government's case as it moves to a higher court.
When settlement talks collapsed two weeks ago, Microsoft Chairman Bill Gates said many of the government's proposals amounted to "extreme concessions that go far beyond" the case.
Mixed reactions
Microsoft spent an estimated US$1 billion developing and marketing Internet Explorer before weaving the program into its dominant Windows operating-system software and giving it away at no additional charge. After it was added to Windows, Explorer overwhelmed the rival product that pioneered the market, Netscape Navigator, and has become the main on-ramp to the Internet for millions of computer users around the world.
In their lawsuit filed two years ago, the Justice Department and states alleged that bundling Internet Explorer with Windows was an illegal tying of a competitive product with a monopoly product. Last week, Judge Jackson agreed, saying the illegal tie was one part of a pattern of predatory acts intended to protect the Windows monopoly and extend its dominance to the Internet. Microsoft rejects the ruling and says it will appeal.
Before any appeal, though, Judge Jackson must determine what remedy will be imposed on the company. He has asked the Justice Department and states to give him recommendations by April 25.
State and federal officials have gotten mixed reviews from the computer industry so far on the proposal to strip Microsoft of its intellectual-property rights to the browser. Some in the industry are encouraging the government to go further by keeping Microsoft out of some lines of business entirely.
"In my business, compatibility with Internet Explorer is crucial; it is the standard that we all have to meet," said the chief executive of a software maker who has been briefed on some proposals in the past. But he said that any remedy should address Microsoft's broader market dominance because "part of the power of owning the browser is that it gives them a means of distributing their other services" such as the MSN home page and Hotmail.
"It's extraordinarily valuable real estate," this person said.
The executive also said that antitrust enforcers "need to hear the views of the industry -- there's a lot at stake, and they are being pretty thorough about it." But he added that in previous sessions with Justice Department officials, it was difficult to tell what might ultimately become part of the government remedy recommendation.
"They are poker players, and you can't tell what they're thinking," he said.
I think Microsoft should keep the Internet Explorer rights because they have been doing such a great job on it and it would be a shame if someone who wasn't as good took over Internet Explorer.
Also I reckon everyone should ease up on Microsoft. They are a great software compnay.