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Justice Dept. Will Not Seek Microsoft Breakup

The decision reverses the Clinton White House legal strategy against the software manufacturer and formally ends the historic attempt to dissolve one of the most successful companies in U.S. history.

In a statement released today, the department said it would also not pursue an unresolved claim that the company illegally bundled its Internet Explorer browser with its Windows operating system. The agency said it was taking these steps to obtain “prompt, effective and certain relief for consumers.”

“In view of the Court of Appeals’ unanimous decision that Microsoft illegally maintained its monopoly over PC-based operating systems — the core allegation in the case — the department believes that it has established a basis for relief that would end Microsoft’s unlawful conduct, prevent its recurrence and open the operating system market to competition,” the department said.

The new judge assigned to handle the Microsoft case, U.S. District Court Judge Colleen Kollar-Kotelly, last month ordered the parties to report on the remaining issues in the legal battle by Sept. 14 and scheduled a meeting on the status of the case for Sept 21.

Kollar-Kotelly will hold hearings to decide what sanctions to impose on the software giant to prevent future abuse of its monopoly in personal computer operating systems, but will no longer consider breaking up the company.

A Microsoft spokesman said only that company officials “remain committed to resolving the remaining issues in this case.” Microsoft stocks jumped briefly after the announcement before slipping back into negative territory.

The decision was not unexpected. Attorney General John Ashcroft declined to comment on the issue during his confirmation hearings, saying the case needed further review. 

Rather than seeking a breakup, the government will pursue a series of measures modeled after remedies ordered before the antitrust case went to a federal appeals court.

The restrictions included an order for Microsoft to make public technical information about how its operating systems interact with its software. Outside developers would then be able to pick apart the computer code and make their own products more compatible. Microsoft would also have to give up control of the icons that would appear on the Windows operating screen when a user bought a computer.

Computer industry analysts said the restrictions would have affected the upcoming Windows XP operating system, which has been finished by Microsoft programmers but will not hit store shelves until October.

“All of these little things really have to do with how XP is being prepared and marketed,” said Howard University law professor Andy Gavil.

When they were introduced by the government, Microsoft chief executive Steve Ballmer called them “Draconian regulations.” At the time, he said, “The regulations described here would be equally as threatening and hard on our core ability to do new good work.”

Microsoft recently sent the final Window XP code to computer manufacturers. Some critics have charged that the rollout is evidence that the company did not fear further legal action and would continue to use its power to squeeze out competition in new markets.

Windows XP includes many new features that are currently stand-alone products made by competitors, including a program for storing digital photos and an instant messaging system.

As part of today’s announcement, the Justice Department said it will ask the court for time to investigate developments in the industry since the trial concluded and “to evaluate whether additional conduct-related provisions are necessary, especially in the absence of a breakup.”

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