Microsoft Turns In Proposed Remedy to Anti-Trust Case

Microsoft Corp. presented its counterproposal to a federal district court after the U.S. Department of Justice and 17 states asked the federal judge, who found that Microsoft stifled competition by abusing an operating system monopoly, to split Microsoft in two.

The Microsoft proposal calls for a series of limits on the business practices that Judge Thomas Penfield Jackson found illegally limited competition in the browser and middleware markets. Microsoft also requests more time from the court to prepare counterarguments if the court takes the government's breakup proposal seriously.

On April 28, the Justice Department ( presented its proposal to break Microsoft ( into two separate companies, one to produce only Windows operating systems and one to produce all other software titles. Additionally, Microsoft would have to disclose its currently closed APIs for its Windows software. At that time, Microsoft called the Justice Department's proposal "draconian" and vowed that the company would not be broken up.

"This is the right remedy at the right time," Attorney General Janet Reno said of the government's plan then.

Wednesday's proposal came from Microsoft's lawyers and top brass and urged Judge Jackson to dismiss the government's proposal to break up the company.

"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 Microsoft chairman and chief software architect Bill Gates.

The Microsoft proposal addresses several violations found by the court. Microsoft would resolve the issue of OEM flexibility with the requirements that Microsoft allow computer manufacturers to delete the Internet Explorer icon from the Windows desktop and Start menu, offer their own Internet sign-up process in the initial Windows boot sequence, display icons for non-Microsoft platform software products on the Windows desktop, and configure a non-Microsoft Web browser as the default browser. Microsoft would be enjoined from entering into contracts to promote any product or service through Windows in exchange for the other party agreeing to limit distribution of non-Microsoft platform software.

With regard to access to APIs, Microsoft would be enjoined from denying any independent software developer timely and complete access to the technical information the company makes available to the developer community at large. The company would also be enjoined from conditioning the release of information on a developer's agreement not to support a non-Microsoft platform.

Under Microsoft's proposal, the company would also be enjoined from withholding the release of any software product designed to run on a non-Microsoft platform that is ready for commercial release in order to urge the vendor of that platform to limit the development, manufacture, distribution, or promotion of a platform software product that competes with Microsoft.

Finally, whenever Microsoft releases a major Windows operating system, the company would be required to make the preceding operating system available to computer manufacturers at a royalty no higher than the existing royalty.

The proposal includes Microsoft's willingness to pay the attorneys' fees and costs of the plaintiff states in the lawsuit. The proposal would take effect 45 days after it was entered and remain in effect until July 1, 2004, a shorter time period than the 10-year mandatory split proposed by the government two weeks ago.

Microsoft also filed its recommendations for the procedure from this point forward in the case, outlining five potential schedules depending on various scenarios.

If the court wishes to enter final relief immediately based on the findings and conclusions already entered, Microsoft proposes that the court enter Microsoft's draft final decree, including today's remedies, without the need for any additional process. If the court decides to entertain any of the government's remedy proposals but wants to enter a temporary solution while the process continues, Microsoft suggests that the court enter Microsoft's draft final decree as a preliminary injunction.

If the court rejects both the government's breakup proposal and the proposal that calls for the opening of Microsoft's APIs, the company proposes a 10 week period for preparation with trial beginning August 7. If the court dismisses the breakup proposal but considers the disclosure proposal, the company would request four months of discovery, depositions, and preparation for a trial beginning October 2. Finally, if the court considers the government's entire proposal, Microsoft would request six months of preparation for a trial beginning December 4.

Under Judge Jackson's current plan, the government has one week to respond to Microsoft's proposal and oral arguments would begin in open court May 24. - Isaac Slepner

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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