DOJ blasts Microsoft remedy proposal

The U.S. government and states allied against Microsoft Corporation in its antitrust trial have submitted a 70 page reply to the company's proposed remedy, and it will come as no surprise to anyone that the two sides don't see eye-to-eye. And though mired in legal-speak, the document is a scathing attack on Microsoft's proposal, which the government describes as "a cosmetic remedy that would have virtually no competitive significance." Microsoft Corporation last week offered a number of business practice concessions in its proposed remedy, which were a far cry from the breakup of the company that was suggested by the government. Judge Thomas Penfield Jackson will meet with the two sides next Wednesday to discuss a timetable for the remainder of the trial.

"\[Microsoft's proposed remedy\] would neither undo the harm that Microsoft inflicted on competition nor prevent Microsoft from illegally using its monopoly power to inflict similar harm in the future," the response reads. "Microsoft attempts to elide the need for structural relief by pretending, contrary to the evidence at trial and this Court's Findings, that its conduct had no effect on competition ... What remedy does Microsoft propose to undo the damage to competition caused by its past illegal conduct? Nothing. Moreover, despite months of analyzing potential remedies (including reorganizations similar to that proposed by plaintiffs), and despite the fact that information concerning potential issues with respect to such a reorganization is uniquely within Microsoft's knowledge, Microsoft offers no factual support for any of its objections. Instead, it offers only unsupported speculation as to possible problems -- speculation that is inconsistent with the trial record, with the detailed submissions made with plaintiffs' remedy proposal, and with Microsoft's own prior statements."

In essence, the government is reiterating that its plan to split Microsoft into two separate companies is the correct thing to do, given Microsoft's belligerence and history of abuse, because its plan actually addresses the problem. "Microsoft does not, and cannot, rebut the basic points supporting the proposed spin-off," the brief continues. "The separation of Microsoft's operating systems and applications businesses will undo the artificial preservation and enhancement of the applications barrier to entry caused by Microsoft's illegal conduct ... There is no alternative that would restore competitive conditions without significantly greater burdens and potential inefficiencies. Microsoft does not even pretend that the conduct remedies it proposes would undo the anticompetitive effects the Court found resulted from Microsoft's illegal conduct. Moreover, Microsoft's proposed remedy would leave it free in the future to continue to engage in the very conduct that the Court found unlawful under Section 2 of the Sherman Act."

The document addresses virtually every comment that Microsoft has made about the government's breakup plan, including claims by Bill Gates that the crossbreeding of Windows and Office has led to the company's best innovations. The government cites numerous comments from Microsoft officers over the years--including Gates--that show this situation to be a fabrication, that product teams at Microsoft work in isolation and are largely competitive with each other, often duplicating functionality rather than sharing code. And each of the points in the Microsoft proposal is painstakingly broken down, up to and including the company's request to delay the trial until the end of the year so that it might have time to prepare. "Microsoft's proposal, with its alternative schedules tied to a pre-determination of the appropriate remedy by this Court, is merely an attempt to delay the day when the law will hold it accountable for its illegal acts," the document concludes. "Because Microsoft has demonstrated no legitimate need for the substantial delays and wide-open discovery it seeks, its various requests for them should be denied. The United States, seventeen of the Plaintiff States and the District of Columbia request that the Court enter the proposed Final Judgment."

If you're interested in reading the entire document, check out the National Association of Attorneys General Web site, which has HTML and PDF versions available

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