Court orders that Microsoft be broken in two

A Federal judge has ordered the break-up of the giant software company, Microsoft, as the latest chapter in the marathon antitrust action by the US government and 17 states.

Judge Thomas Penfield Jackson also imposed "conduct restrictions" to be implemented in 90 days, but he ruled that the company, whose Windows computer software is used around the world, will remain intact until the appeals process is exhausted. This could take several years.

Microsoft co-founder, Mr Bill Gates, immediately announced that the company would appeal the decision. He described it as "an unwarranted and unjustified intrusion into the software marketplace" and "the most massive attempt at government regulation of the technology industry ever".

He said he was confident an appeals court would overturn the break-up decision. The attorney general, Ms Janet Reno, welcomed the ruling as a "strong, effective remedy" which struck the right balance. She said the conduct restrictions would prevent Microsoft from breaking the law.

These restrictions on Microsoft include forbidding it from negotiating exclusive deals with other companies.

Yesterday's ruling was no surprise as Judge Jackson of the US district court in Washington had earlier indicated that he agreed with the proposal by the department of justice and the states to split Microsoft into two companies. Yesterday's ruling, if affirmed, will split Microsoft into two companies - the operating systems business and the applications business.

The operating systems will include Windows 95, 98, NT, 2000, the mobile operating system Pocket PC and upcoming operating systems. The applications business includes everything else such as the Microsoft Office suite and Internet software like the Explorer browser and Outlook Express e-mail programme.

The department of justice may exercise a rarely-used option in anti-trust cases to bring the case directly to the US supreme court thus by-passing the Washington appeals court which has ruled in favour of Microsoft in earlier litigation.

The judgment came a day after Microsoft filed its final legal papers in the case criticising the proposed break-up. A justice department spokesperson dismissed the Microsoft response. "The filing rehashes Microsoft's old arguments, ignores the extensive violations found by the court, denies the need for serious relief and grossly distorts our proposed remedy," the spokesperson said.

In his ruling of April 3rd, Judge Jackson, found that Microsoft had violated anti-trust laws in trying to crush competition to its Explorer browser from the Netscape rival.

On April 28th, the justice department and the states asked the court to split Microsoft in two. Two weeks later, Microsoft asked the judge to reject this remedy.