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DoJ eschews a 3-way MS split

In its latest antitrust filing, DoJ sticks to its guns in seeking to break Microsoft in two, saying anything else would be too complicated
Written by Lisa M. Bowman, Contributor

The US Department of Justice again asked Judge Thomas Penfield Jackson to split Microsoft in two, in a filing Friday that contained only minor tweaks to a document submitted last month.

During a hearing Wednesday, Judge Jackson had asked the DoJ to present a revised proposal by the end of the week -- a move legal experts say indicates that he was planning to base his final judgment on the document.

In re-filing the document, the DOJ reiterated its request that Jackson hack Microsoft in two parts -- one company that would develop and sell the Windows operating system and another that would produce all other products, including applications such as Microsoft Office and the Internet Explorer browser.

In addition to requesting the split, the DoJ plan would put proposed behaviour restrictions into effect 90 days after the judge signs the order -- instead of the 30 days contained in the original draft.

The revised document also clarified the circumstances under which the new Microsoft companies could still license certain products to each other.

The judge had earlier indicated an interest in a filing by two computer trade groups that urged him to split Microsoft in three by breaking off the browser group into a separate company.

But the DoJ did not add that provision to the document filed Friday, which was submitted in the form of an order that the judge can sign.

When questioned about the three-way breakup proposal in court on Wednesday, DoJ attorney David Boies told Jackson that government trustbusters had considered alternative breakup plans, but that they wanted to avoid scenarios that would be too complex.

On Wednesday, Jackson surprised nearly everyone by abruptly terminating the court session and trial and refusing to grant Microsoft any more time to present witnesses and evidence in the 2-year-old legal battle.

Microsoft had requested six months to fight the remedy plan, and said in a last-minute filing -- called an Offer of Proof -- that it had hoped to put on the stand company Chairman Bill Gates, CEO Steve Ballmer and representatives from investment houses such as Goldman, Sachs & Co. to testify that a breakup would hurt the industry.

In a memo accompanying Friday's document, the DOJ criticised the Offer of Proof, saying Microsoft has known for months that the DOJ was considering asking for a breakup, and that it should have prepared itself instead of submitting a list of "unsubstantiated assertions" to the judge.

"Microsoft was not forthright," the memo said. "The fact that Microsoft had prepared but kept secreted in its briefcases a 35-page Offer of Proof concerning testimony from 16 different witnesses that it allegedly wanted to offer itself demonstrates both that Microsoft was not genuinely surprised about what was expected of it and that it was perfectly capable of being forthright with the Court but chose not to do so."

Microsoft has two days to respond to Friday's filing, and Judge Jackson will issue his ruling after that. Jackson's judgment could come as soon as the middle of next week, though many legal experts think it will take a couple weeks.

However, Microsoft said Friday that it would postpone its Forum 2000 event from next Thursday to June 22. At that event, the company is expected to unveil more details of its Next Generation Windows Services, which include tying Windows more closely to the Internet.

In an email to invitees, the company cited "strong indications that the US District Court in Washington, D.C., may enter its final decree next week in our continuing antitrust matter, an event that we feel would distract attention and focus from our event next Thursday."

It's the first time the company has publicly acknowledged changing its business practices as the result of this case.

The company has indicated it will appeal to a higher court, and any remedy ordered by Jackson likely will be set aside until that process is completed.

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