The decision by the US justice department to press for a break-up of Microsoft is another landmark in the long-running legal proceedings against one of the world's biggest companies. A US court, ruling on an application by the justice department and 17 US states, has already found that Microsoft abused its dominant position in the market. The justice department is now suggesting how this might be addressed.
It will be some time before the judge rules on the matter - he will have to consider submissions from all sides. And even if he accepts the case for a breakup, appeals by Microsoft would be likely to delay such a move for a number of years, unless the company itself decides to negotiate a solution.
It is a landmark case. The action against Microsoft has echoes of the move by the US government to break up John D Rockefeller's monopolistic Standard Oil in 1911, or the splitting up of US telecommunications group AT&T in the early 1980s. And the outcome will be every bit as important as it was in those cases.
Microsoft has been found guilty of abusing its market position in a number of ways. The best example is the way that it sold consumers its Windows computer operating system bundled up with software which allowed them to navigate the world wide web - so-called internet browsers. This greatly disadvantaged other internet browser producers, particularly another US company, Netscape.
Microsoft continues to insist that it has not transgressed any laws and that moves to break up the company are inappropriate. However, in its submission to the court last Friday, the justice department now claims to have uncovered fresh evidence that Microsoft has continued to abuse its dominant position over the past year. It wants the company split into two - separating the production of computer operating systems from the development and sale of the software which runs on them. Microsoft is already appealing the judge's decision that it violated competition rules and will fight the break-up plan every step of the way. As this process continues, the US court faces an important task in putting in place interim rules on the way Microsoft operates, to ensure that the competitive abuses do not continue as the legal process drags on. The points made in the legal proceedings are important and the precedents set will have long-term implications. The key principle at issue is competition and the right of consumers to have the widest possible choice at the lowest cost. The court has still to hear Microsoft's response to the justice department's proposal. But so far the company's arguments have been far from convincing. Crucially, it has still not accepted that there is a problem to be addressed.
Because of this, splitting the company into two may be the best option as it should encourage the development of a range of computer operating systems and a choice of software products for consumers. It would, for example, encourage the applications software arm to develop products which run on a range of operating systems and not just on Microsoft's own system. If Microsoft has another proposal on how to create more open competition in the market, then it had better come up with it quickly. Otherwise it risks having a solution imposed by the court.