Some States Wavering on Microsoft Breakup
The government’s hard line in the Microsoft Corp. antitrust case appears to be softening as some state attorneys general voice misgivings about pursuing a breakup of the software giant, which could complicate a settlement in the case.
Ohio Atty. Gen. Betty Montgomery confirmed reports that breaking up Microsoft is not at the top of her list as a solution in the case. Rather, she favors curbing some of Microsoft’s aggressive business practices by prescribing actions the software giant can and cannot take in its business dealings.
Spokesmen for attorneys general of Wisconsin, Utah, Iowa and New York declined comment on Montgomery’s misgivings or declined to elaborate on their own views about a remedy for the case. But two other state officials, who requested anonymity, indicated that they too have doubts about a breakup of the Redmond, Wash., software giant but said they remain undecided about its potential legal fate.
The controversy among officials over a breakup of Microsoft comes only days after Microsoft President Steve Ballmer dismissed any idea of breaking up the company as “reckless and irresponsible.”
Ballmer’s comments came after reports that the Department of Justice plans to aggressively lobby for breaking Microsoft into two or three separate companies, dubbed “Baby Bills” after Microsoft Chairman Bill Gates.
This new dissension is the most significant division to develop among the Justice Department and the 19 states behind the Microsoft antitrust suit since South Carolina withdrew from the case 13 months ago.
Although the states have developed a reputation for wanting Microsoft slapped with the stiffest antitrust sanctions, their tough talk has subsided. Meanwhile, the Department of Justice’s position has apparently hardened since U.S. District Judge Thomas Penfield Jackson issued his scathing findings of fact on Nov. 5 that Microsoft had abused its software monopoly.
But critics have suggested a court-ordered breakup of Microsoft could derail the nation’s economic boom, which has been fueled by technology and the spread of personal computers powered by Microsoft’s Windows software.
“The breakup of AT&T; Corp. made a lot of economic sense in that you had local [telephone] exchanges that were clearly independent from the long-distance business,” said Ernest Gellhorn, an antitrust expert and law professor at George Mason University in Fairfax, Va. “Breaking up Microsoft into an operating systems division and an application division isn’t going to change a whole lot. They will still dominate [and] . . . you won’t necessarily be creating new economic opportunities.”
Almost from the beginning of the Microsoft trial, experts speculated that government’s united front would not hold through a lengthy antitrust trial.
“It’s always been possible that when you have 19 institutions, you could have some dissimilar views in the coalition,” said William E. Kovacic, an antitrust expert and a law professor at George Washington University.
Kovacic added that although it is “hard to tell how extensive the disagreement is” among the states, his discussions with officials involved in the case lead him to believe that most feel that “conduct-oriented solutions [alone] won’t make this case worthwhile” to pursue.
Officials representing the District of Columbia and the remaining 19 states insist that there is no revolt among the states over what sanctions to pursue against Microsoft.
“To imply there is a lot of division among the states is an enormous leap,” said Iowa Atty. Gen. Tom Miller, who heads the executive committee overseeing the states’ litigation against Microsoft. Miller added that Montgomery’s comments in no way characterized the states’ negotiation position in settlement talks.
Montgomery’s comments came as the federal government submitted its final legal brief before final courtroom arguments start Feb. 22 before Judge Jackson.
In the 36-page filing Tuesday, government lawyers derided Microsoft as having “nothing of substance to say” to rebut government claims that its business conduct is illegal and anti-competitive.
The government went on to accuse Microsoft of seeking “to apply to this case out-of-context passages from decisions involving patently different market circumstances.”
