Excerpts From the Ruling
U.S. District Judge Thomas Penfield Jackson’s ruling consists of two parts: a judgment and a more conversational memorandum outlining his thinking in the case. Here are portions of each.
From the Judgment
The Breakup Order
Not later than four months after entry of this Final Judgment, Microsoft shall submit to the Court and the Plaintiffs a proposed plan of divestiture. ... The separation of the Operating Systems Business from the Applications Business, and the transfer of the assets of one of them (the ‘Separated Business’) to a separate entity along with (a) all personnel, systems, and other tangible and intangible assets (including Intellectual Property) used to develop, produce, distribute, market, promote, sell, license and support the products and services of the Separated Business, and (b) such other assets as are necessary to operate the Separated Business as an independent and economically viable entity.
From the Judge’s Memorandum
Skepticism About Company’s ‘Surprise’
Microsoft claims, in effect, to have been surprised by the “draconian” and “unprecedented” remedy the plaintiffs recommend. What it proposes is yet another round of discovery, to be followed by a second trial -- in essence an ex post and de facto bifurcation of the case already considered and rejected by the Court. Microsoft’s profession of surprise is not credible. From the inception of this case Microsoft knew, from well-established Supreme Court precedents dating from the beginning of the last century, that a mandated divestiture was a possibility, if not a probability, in the event of an adverse result at trial. ... Even assuming that Microsoft negotiated in utmost good faith in the course of mediation, it had to have in contemplation the prospect that, were mediation to fail, the prevailing plaintiffs would propose to the Court a remedy most to their liking and least likely to be acceptable to Microsoft. Its failure to anticipate and to prepare to meet such an eventuality gives no reason to afford it an opportunity to do so now.
Microsoft’s Refusal to Admit Wrongdoing
Following a full trial Microsoft has been found guilty of antitrust violations, notwithstanding its protests to this day that it has committed none. The Court is convinced for several reasons that a final -- and appealable -- judgment should be entered quickly. It has also reluctantly come to the conclusion, for the same reasons, that a structural remedy has become imperative: Microsoft as it is presently organized and led is unwilling to accept the notion that it broke the law or accede to an order amending its conduct. First, despite the Court’s Findings of Fact and Conclusions of Law, Microsoft does not yet concede that any of its business practices violated the Sherman Act. Microsoft officials have recently been quoted publicly to the effect that the company has “done nothing wrong” and that it will be vindicated on appeal. The Court is well aware that there is a substantial body of public opinion, some of it rational, that holds to a similar view. It is time to put that assertion to the test. If true, then an appellate tribunal should be given early opportunity to confirm it as promptly as possible, and to abort any remedial measures before they have become irreversible as a practical matter. Second, there is credible evidence in the record to suggest that Microsoft, convinced of its innocence, continues to do business as it has in the past, and may yet do to other markets what it has already done in the PC operating system and browser markets. Microsoft has shown no disposition to voluntarily alter its business protocol in any significant respect. ... Third, Microsoft has proved untrustworthy in the past. ... If it responds in similar fashion to an injunctive remedy in this case, the earlier the need for enforcement measures becomes apparent and the more effective they are likely to be.
Plaintiffs Determine the Remedy
Plaintiffs won the case, and for that reason alone have some entitlement to a remedy of their choice. Moreover, plaintiffs’ proposed final judgment is the collective work product of senior antitrust law enforcement officials of the United States Department of Justice and the Attorneys General of 19 states, in conjunction with multiple consultants. These officials are by reason of office obliged and expected to consider -- and to act in -- the public interest; Microsoft is not.
The Price of Failing to Settle
The final judgment proposed by the plaintiffs is perhaps more radical than might have resulted had mediation been successful and terminated in a consent decree.
