Microsoft Asks Congress to Oppose Any Breakup
Microsoft Corp. appealed to Congress to oppose a breakup of the company as talks to settle the government’s landmark antitrust case against the software giant have failed so far to produce an agreement.
Breaking up the company would be “the equivalent of a regulatory death sentence,” Microsoft said in a Feb. 9 e-mail to members of Congress. The company “is serious about trying to settle this case, and we believe a common-sense settlement should be possible,” Microsoft lobbyist Kerry Knott wrote.
Knott, former chief of staff to House GOP leader Dick Armey of Texas, sent the letter to lawmakers as the case against Microsoft hits a crucial stage. The company and the government will argue Tuesday before U.S. District Judge Thomas Penfield Jackson on whether the company broke the law.
Microsoft won support for its position from Sen. Robert Torricelli (D-N.J.), who has mailed a letter to Atty. Gen. Janet Reno and Microsoft President Steve Ballmer opposing a breakup of the company.
“It is critically important for both sides to avoid extreme positions, such as proposals to break up the company, and instead work for a balanced settlement,” wrote Torricelli, who chairs the Democratic Senatorial Campaign Committee.
Microsoft, a heavy contributor to national party committees, gave at least $50,250 in soft money to the Torricelli-led DSCC last year and $90,000 during the 1997-98 election cycle, according to the Center for Responsive Politics. Overall, Microsoft had given $417,350 in soft money--$316,000 of that to Republicans--during the first three quarters of 1999, the center said.
Talks with a mediator appointed by Jackson have failed to produce an out-of-court settlement and prospects remain dim, people familiar with the discussions said.
News of Microsoft’s appeal to Congress, reported in Wednesday’s Wall Street Journal, had little impact on the company’s shares. They closed off 94 cents at $97.63 on the Nasdaq Stock Exchange.
Microsoft’s e-mail “indicates to me they are going to try to resolve this by political means [rather] than through negotiation,” said Stephen Houck, former trial counsel for the 19 states that joined the U.S. Justice Department in suing Microsoft. Houck is a partner at Reboul, MacMurray, Hewitt, Maynard & Kristol in New York.
“We are always happy and interested in reaching a fair and reasonable settlement that addresses the concerns of the government,” Microsoft spokesman Jim Cullinan said Wednesday.
Antitrust enforcers were emboldened by Jackson’s findings on Nov. 5 that Microsoft had a monopoly over personal computer operating software and repeatedly quashed competition to preserve its market domination. After the findings, government lawyers said they would consider proposals to break up the company.
In meetings with mediator Richard Posner, chief judge of the U.S. 7th Circuit Court of Appeals, antitrust enforcers have proposed breaking the company into two units, people familiar with the discussions said.
Microsoft’s e-mail elicited statements from leading lawmakers urging both sides to reach an out-of-court settlement.
“Both consumers and the industry would benefit from a fair resolution of this case,” said Senate Democratic leader Tom Daschle. “The current mediation provides both parties a unique opportunity to resolve this dispute in a way that strikes a balance between the importance of our antitrust laws and innovation.”
That opportunity, however, may be slipping away, Houck said, if Jackson rules--as many legal experts expect--that the company violated antitrust laws. Such a ruling would lead to hearings on imposing remedies to prevent recurrence of business practices the government alleges were intended to protect Microsoft’s domination of Windows operating software.
