Trade Group Hopes Fed Case Brings Breakup of Microsoft

By Bridis, Ted | THE JOURNAL RECORD, March 5, 1999 | Go to article overview

Trade Group Hopes Fed Case Brings Breakup of Microsoft


Bridis, Ted, THE JOURNAL RECORD


WASHINGTON -- A prominent trade group in the technology industry, traditionally loath to involve the government in its business, is endorsing in a secret report the breakup of Microsoft if the company loses its landmark antitrust case.

It's unclear how the proposal might affect government lawyers, who are pondering what to do about the software giant as the trial moves into the final stages -- with the growing likelihood of an eventual ruling at least partly against Microsoft.

Outside the bitter courtroom fight, there is genuine apprehension in Washington about tinkering with the awe-inspiring success of a company that employs 27,000 people, recorded $14.4 billion in sales last year and whose Windows software runs most of the world's personal computers. The Software and Information Industry Association made its recommendations in a report sent to Justice Department lawyers after a vote by its board. The group proposes what some legal experts call the "death- penalty" for Microsoft if it loses -- splitting it up into companies selling separate products, such as Windows software and Internet content, or breaking it into three or four "Baby Bills" or "Mini- Microsofts" each with identical products. The group said a breakup "deserves the most careful attention of the government and the court." But it doesn't distinguish which breakup plan it recommends, calling it "ultimately an antitrust policy question with no clear answer." Microsoft says it is premature to consider choices it could face. Spokesman Greg Shaw called the described remedies "little more than wishful thinking by our competitors." If the government prevails, its once-bitten lawyers will be mindful of their own previous, failed efforts to muzzle Microsoft. Just a few months after Justice last forced Microsoft to agree to tone down its aggressive behavior, Bill Gates met with executives of a business ally who asked him about his apparently uncharacteristic surrender. "This antitrust thing will blow over," the company's billionaire chairman answered, according to the meeting's notes. "We haven't changed our business practices at all." That 1995 consent decree, endorsed by the same judge in the ongoing trial, didn't stop Microsoft from bundling its Internet software into Windows, a central issue in the current case. The 1995 agreement instead focused on encouraging competition for operating systems. But it's clear that Microsoft was more worried, by then, about the Internet's emerging threat. "It was closing the barn door after the horse was down the road in another city," quipped Richard Gray, a California antitrust lawyer.

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