Microsoft Responds to the DOJ

Calling the government’s breakup proposal unjust, unprecedented, and excessive, Microsoft called for a dismissal of the proposal, and offered its own proposal yesterday. In April, Judge Thomas Penfield Jackson found Microsoft guilty of anticompetitive monopolistic behavior. Later that month, the US Department of Justice (DOJ) and attorney generals for most of the states suing Microsoft submitted a proposal for breaking up the company. The outline of the proposal argued that the government should split Microsoft into two companies, one responsible for the Windows OS and the other responsible for all other product lines. Only Ohio and Illinois dissented, recommending that the government restrict Microsoft in its anticompetitive behaviors. In essence, the DOJ is arguing that Microsoft is a monopoly and that Microsoft has used its monopoly in an anticompetitive manner. The DOJ is recommending that the government stop this behavior by breaking up the monopoly. Microsoft Chairman Bill Gates responded to the breakup proposal. "We are working to try to resolve this case as quickly as possible, in a fair and reasonable manner. We believe there is no basis in this case for the government's unprecedented breakup proposal, and we are hopeful that the Court will dismiss this excessive demand immediately so that the case can move forward much more rapidly," said Gates. "Even without the extreme breakup proposal, many elements of the government's proposed regulations are unwarranted, outside the scope of this case, and very damaging to consumers. The government's proposals would take away Microsoft's property by forcing us to disclose the source code for our products, even though Microsoft spent hundreds of millions of dollars to develop these products. The government also seeks to interfere with the design of Microsoft's products." Microsoft’s response argues that the government’s proposal uses claims that were not discussed at trial. Microsoft filed its proposed solution, which includes the following:

  • OEM flexibility: Allowing computer manufacturers to customize the desktop and boot sequence.
  • Contracts: Enjoining Microsoft from creating contracts that prevent distributors from dealing with non-Microsoft OSs.
  • Access to APIs: Forcing Microsoft to allow all third-party vendors equal, timely, and complete access.
  • Release of products for non-Microsoft platforms: Preventing Microsoft from holding back on Microsoft products for non-Microsoft OSs (e.g., withholding Microsoft Word for Macintosh) as an aggressive move toward other OS makers.
  • Predecessor OSs: Preventing Microsoft from forcing migrations by increasing the price of older Microsoft OSs as newer Microsoft OSs come out.
Microsoft’s recommendations propose that the government's proposed remedies be limited to the anticompetitive behaviors pointed out at trial. Microsoft also asked that the judge reject the DOJ's proposal quickly, arguing that the proposal was damaging Microsoft by reducing the company's ability to hire and retain employees and discouraging other companies from dealing with Microsoft. You can find the text of Microsoft’s official response at Microsoft's Web site.
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