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U.S. To Reject Microsoft Proposal

May 17, 2000

WASHINGTON (AP) _ The government was poised Wednesday to defend its proposed breakup of Microsoft and likely to urge a federal judge to reject milder sanctions suggested as alternatives by the software giant.

In its reply to arguments outlined by Microsoft last week, the government was expected to reinforce its assertion that a breakup would be the best way to prevent illegal behavior by a company found to have acted in wide violation of federal antitrust laws.

Under a plan submitted last month by the Justice Department and 17 of the states that successfully sued Microsoft on antitrust charges, Microsoft would be broken up into two companies. One would develop the company’s dominant Windows computer operating system and the other, everything else, including Microsoft’s Office software and its Internet services. The two companies would have to stay separate for at least 10 years.

The government plan also would impose numerous temporary restrictions on Microsoft’s business practices while the case moves through the appeals process.

Microsoft was found to have violated federal antitrust laws through predatory and anticompetitive behavior in an April 3 ruling by U.S. District Judge Thomas Penfield Jackson.

Microsoft plans to appeal the ruling.

In its formal response to the government’s plan, the Redmond, Wash.-based company asked Jackson to dismiss the government’s proposal, saying such a severe punishment lacks a basis. Microsoft also suggested that splitting up the company would have a dangerous impact on the country’s high-tech industry and economy.

Microsoft instead offered Jackson milder remedies it promised to impose on itself. The remedies would curb the company’s conduct against competitors and clients dealing with rivals.

The brief filed Wednesday by the government essentially will be the last official word before Jackson holds a hearing on the issue. The next round in the antitrust battle takes place in the judge’s courtroom on May 24, when both the government and Microsoft will offer arguments in support of their proposals. Jackson is likely to set out a timetable for proceeding with the case at the hearing.

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