Justice Department considers Microsoft breakup

CNET - The Justice Department is considering a breakup of Microsoft as part of a range of possible remedies in the antitrust case against the world's largest software company, Assistant Attorney General Joel I. Klein said.

"That is in the range, but we're looking at a lot of remedies," Klein said on ABC's This Week.

Klein's comments marked his first public confirmation that the Justice Department and 19 states suing Microsoft might request a corporate dismantling.

His comments came two days after U.S. District Judge Thomas Penfield Jackson said Microsoft "stifled innovation" by abusing its monopoly over personal computer operating systems.

Jackson stopped short of saying Microsoft violated U.S. antitrust laws, although his preliminary factual findings suggest he likely will make that conclusion early next year. The judge then will decide what remedies to impose on Microsoft.

Antitrust lawyers have speculated that the Justice Department also might ask Jackson to force Microsoft to license its Windows operating system or bar business practices such as exclusive agreements with computer makers and Internet service providers.

Several breakup methods
A breakup of Microsoft could take any of several forms. One method would be to divide Microsoft into two companies: one that makes an operating system and one that produces other software applications. Another method, urged by rival Sun Microsystems and others, would create at least two new "clone" companies that would have full rights to Microsoft's legal assets.

Microsoft has said it remains confident in its case.

"We are in the third inning of a nine-inning game," Microsoft chief operating officer Robert Herbold said on Fox News Sunday. "We are confident that at the end of that process, the decision will match what's going on in the marketplace today--namely, a ton of innovation."

In a full-page advertisement in the Washington Post today, chairman Bill Gates made it clear the company is considering an appeal.

"We respectfully disagree with a number of [Jackson's] findings and believe that ultimately the American legal system will affirm that Microsoft's actions and innovations were fair and legal and have brought tremendous benefits to consumers, our industry, and to the United States economy," Gates said.

Klein said the 1984 breakup of telephone giant AT&T--a product of a Justice Department antitrust suit--was a "true success story," although he quickly added that Microsoft "is a different case" from AT&T.

"We're doing an analysis to make sure that we have a remedy that will promote competition, assure innovation, and promote consumer choice," he said on This Week.