Microsoft files robust response to US government

Microsoft has filed its response to a US government plan to break the giant software company into two parts because of violations of anti-trust laws. The filing calls the government plan "defective" and "vague".

This filing has cleared the way for Judge Penfield Jackson to give his final ruling, possibly later this week, on the form of the US district court's sanctions against Microsoft.

In April, the judge ruled that the company had broken antitrust laws by abusing its virtual monopoly in personal computer operating systems and thus damaging rival companies and consumers.

The justice department and 17 of the 19 states which have taken the anti-trust suit then submitted a plan calling for Microsoft to be broken up into two separate companies. One would manufacture the Windows operating systems and the other would be responsible for the Office suite of software applications and the Internet browser.

It would be the severest antitrust action against an American company since AT&T telephone company was broken up into regional "baby Bells" in 1982.

Microsoft has said that it will appeal the judge's final ruling. This process could mean the case goes to an appeal court or straight to the supreme court by using a special procedure. In either case the final outcome may not be known for months or even years.

In trading on Wall Street yesterday before Microsoft filed its response, the company's shares fell almost 2 per cent to $62.5.

The Microsoft filing yesterday proposed changes "designed to correct the ambiguity and vagueness" of the break-up plan, according to a company spokesman, Jim Cullinan.

He added: "We are offering these edits with the obvious caveat that we do not believe that such an extreme and damaging remedy would be sustained by the appellate process. "Still, we may have to live with this in some form or another and we want it to be as clear as possible."

Microsoft has in the filing asked the judge to give it one year to come up with a plan to break up the company. The government had asked for the company to be given four months.

Microsoft also issued a brief discussing its "offer of proof" which it hurriedly filed last Wednesday just as the judge was about to close the case. This proposes testimony from witnesses such as Bill Gates, the co-founder of the company.

The company has also offered the chief executives of other computer and software companies such as Compaq, DreamWorks and J.D. Edwards as potential witnesses. They would testify about the negative effects of a break-up, according to Microsoft, but they may never be called.

Microsoft had asked last week that the judge would allow it a further six months to gather evidence and depose witnesses but he refused, saying Microsoft had already had several years to present a full case.