Sun responds to Microsoft antitrust ruling

Sun Microsystems announced this week that it supported Judge Thomas Penfield Jackson's verdict in the Microsoft antitrust case, which wasn't unexpected. But the company became the first to publicly recommend the breakup of Microsoft, an interesting development given the relative quiet of even Microsoft's strongest enemies throughout the trial. In an open letter posted to its Web site Monday night, Sun stated that Microsoft must be broken into separate companies and prevented from using its "cash horde" to kill competition, among other measures.

"Today's important decision confirms what almost everybody in the world knows: Microsoft is a monopoly that has acted illegally," said Scott McNealy, the CEO of Sun Microsystems. "The Justice Department and the States deserve immense credit for putting together a case that so clearly showed Microsoft's true colors. Now is the time to move on to the important stage of this trial--determining how to prevent Microsoft from continuing its use of monopoly power to stifle innovation and harm consumers. We hope the Court will act decisively to ensure that Microsoft's illegal activity--and the harm that it has done to the industry and to consumers--is brought to an end forcefully and permanently."

Despite McNealy's past posturing about Microsoft, I found his perspective on the antitrust trial to be dead-on in a post-keynote press conference at Fall Comdex last year. But with Microsoft's defeat at the hands of the U.S. government, McNealy's suggestions for a Microsoft remedy have been expanded to include a breakup. Specifically, Sun now says that Microsoft should be split into three companies, so that the application and Internet-related divisions are spun off into separate organizations. Additionally, Sun says, Microsoft's remaining operating system should be itself split into three "distinct and competing" companies.

But Sun's recommendations don't stop there. The company recommends that Microsoft be prevented from using its massive cash reserves to kill innovation by making investments. "The company must be prohibited from using its ill-gotten gains to buy its way into new markets and lock in new customers," the letter reads. And, of course, the company recommends that Microsoft be required to open its monopoly APIs in Windows and Office so that any company might easily create products that interoperate with these platforms. Also, Sun believes that Microsoft should be required to make its pricing public and nondiscriminatory. And finally, Sun says, Microsoft should be prohibited from entering into exclusionary contracts with PC makers that prevent those companies from working with Microsoft's competitors.

"Now that the verdict is in, the next step is to address the harm that has been done to consumers and the industry," said Michael Morris, Sun's General Counsel. "To ensure that the remedies are effective, Sun believes that a combination of structural and conduct approaches should be imposed. The result of our approach will be: Microsoft, for the first time in over 15 years, will be subject to the discipline of the market, competition will be restored and consumers will have access to greater choice, better products and lower prices. Only in this way will the enormous growth potential of the United States technology industry be protected."

Given Sun's public comments about Microsoft in the past few years, it's easy to dismiss anything the company says as competitive rhetoric. But McNealy, of all people, had some logical comments about the antitrust trial that were recently massaged into this public statement. And the company has some good ideas for dealing with what is, quite obviously, the most predatory monopolist of our time

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