Microsoft Seeks to Avert Breakup

Microsoft Corp. will ask U.S. District Judge Thomas Penfield Jackson today to throw out the government’s proposal to split up the software giant, arguing that no judge in history has ever ordered such a drastic remedy.

Using the government’s own admission in 1995 that it would be against the public interest to break up the software giant, Microsoft will argue that dividing the company into two independent concerns is unprecedented.

Microsoft maintains that its forced breakup would be unlike the historic “bust-ups” of AT&T; Corp.--which was divided into a long-distance company and seven Baby Bells under a 1984 consent decree--and Standard Oil Co. in 1911, which Microsoft argues was really a divorce among several companies operating with virtual autonomy under the oil giant’s umbrella.

Surprisingly, some of Microsoft’s opponents in the landmark antitrust case think the software company has a compelling argument.

“Microsoft has a little better position on the law here than the government,” said Howard University law professor Andrew Gavil, who has usually sided with the government in the antitrust dispute.

“I don’t seriously think the government believes it’s going to get a breakup of Microsoft. I just think they put it on the table so that two years down the road [when Microsoft’s power has presumably grown greater without such a sanction], they can say, ‘I told you so,’ ” said Robert H. Lande, a University of Baltimore law professor seen as sympathetic to the Justice Department.

Each side will get about an hour to argue its case today before Jackson. This comes after the Justice Department and 17 states proposed that Microsoft be broken into two companies. Microsoft then filed papers arguing that the breakup plan is “unwarranted” and proposed milder remedies.

Jackson is not expected to decide the issue immediately. In the meantime, opponents fear that Microsoft is pursuing an alternative strategy of trying to delay the outcome of the trial until after the November election.

Anything that might delay a final verdict until January would put the dispute in the hands of a new administration.

Vice President Al Gore has refused repeated questions about his views on the case, and Texas Gov. George W. Bush has “worried” aloud about the antitrust consequences if Microsoft is broken up.

There is no certainty that a new president would urge the Justice Department to drop the case or soften its breakup plan. But opponents of the software giant often talk of the government’s 12-year antitrust case against IBM Corp., which was dropped after Ronald Reagan was elected president.

With one eye on the calendar, Microsoft has argued for “significant time” to prepare for hearings on the government’s proposed breakup of the company into two parts and has argued that a full proceeding on any remedies in the case should be delayed until as late as Dec. 4.

Although many experts say Jackson probably won’t delay the hearing that long, the jurist is likely to grant an extension of at least several weeks. Unforeseen scheduling conflicts could extend the case into the fall.

“But it’s in the government’s interest to move the case along as rapidly as possible,” said New York antitrust lawyer Stephen D. Houck, who for more than a year served as the state’s chief trial lawyer during the Microsoft trial.

Connecticut Atty. Gen. Richard Blumenthal, who is one of four state government lawyers most closely involved in managing the states’ case, said any Microsoft strategy aimed at delaying the matter until a new group of federal trustbusters can review it is fundamentally flawed because state prosecutors are not backing down.

Blumenthal vowed that, if necessary, the states would pursue the Microsoft antitrust case all the way to the Supreme Court, no matter who the next president or attorney general may be.

Many antitrust experts doubt the government will drop the Microsoft case because Jackson has already ruled that Microsoft violated antitrust laws. Still, a breakup remains a long shot, experts say.

“That whole [delay] scenario can produce, at best, only marginal benefits,” antitrust expert Gavil said. “It’s unlikely that a new administration will drop this lawsuit. A new administration might reconsider a breakup, but even if that happens, you still have 17 states to contend with.”