Judge: No more time for Microsoft

Judge Thomas Penfield Jackson yesterday brushed aside pleas from Microsoft lawyers seeking more time to defend the software giant against a proposal to break up the company.

          US District Judge Thomas Penfield Jackson yesterday brushed aside pleas from Microsoft lawyers seeking more time to defend the software giant against a US government proposal to break up the company to remedy multiple violations of federal and state antitrust law.

          Jackson is expected to issue his final judgment in the case within weeks, or perhaps even days.

          At a courtroom hearing, Jackson repeatedly clashed with Microsoft's lead trial counsel, John Warden, who asked the judge for more time -- and broad new legal tools -- to renew the company's defense against an April 28 U.S. government request that Jackson split the company in two. Warden protested that a breakup could not be ordered without elaborate proof that what Microsoft had done in the past directly thwarted competition that would have ended the software vendor's market-dominating position.

          "This case has been pending for two years," said Jackson brusquely.

          Yesterday's hearing was the latest in a long string of courtroom victories for the US government, which wants Jackson to cleave Microsoft into two companies -- one for its Windows operating systems, subject to a raft of conduct restrictions; and one for its software applications, including the Office suite and the Internet Explorer Web browser.

          Yesterday's hearing surprised observers, who widely expected Jackson to be mindful of the appeals court and give Microsoft at least some additional time to mount a defense against the breakup proposal.

          Earlier, Jackson had demanded that Warden tell him what prior court decisions required the proof Warden said was necessary.

          "There is no case that directly addresses this point," Warden conceded.

          "I didn't think so," the judge shot back. Later, he told the lawyers that he "was not contemplating any further process" in the trial.

          Jackson told government lawyers to file a "clean copy" of their breakup proposal, with any changes they cared to make, by Friday. The judge granted a request by Warden giving Microsoft 48 hours to respond to that brief.

          Most of Jackson's questions for US government attorneys focused on why the government had not proposed a more far-reaching remedy. Under the plan from the US Department of Justice (DOJ) and 17 US state attorneys general, the software giant would be split into two companies, one for its Windows operating systems and one for applications.

          "The effect of a bisection will in effect create two separate monopolies," Jackson observed. "Both of which are dominant and eminently profitable," he added a moment later.

          The government's lead trial counsel, David Boies, conceded that a court-ordered split was a "difficult issue" for the judge, noting that the government had considered a variety of proposals, including one that would split Microsoft into three equal companies, each selling a version of Windows.

          Jackson asked Boies why that option was rejected, and later inquired about a plan submitted to the court by two computer industry trade groups that favored breaking up Microsoft into an operating systems company, an applications company and an Internet company. The judge called the submission an "excellent brief."

          To bolster its case for a breakup of some kind, the government released two e-mail messages from Microsoft's then-CEO Bill Gates. In a 1998 message, Gates discussed the challenge from Symbian to Microsoft's efforts to provide software for cellular telephones. Symbian Ltd., a London-based provider of wireless technology, was planning to use Java and Sun Microsystems Inc. technology in its cell-phone software. Gates said that would be "just declaring war on us." If Symbian followed that strategy, said Gates, "we should do the most extreme things we can. This may mean not working with them in some other areas."

          In a 1999 message, Gates discussed Microsoft's plan for competing with Palm in the personal digital assistant, or PDA, market. After meeting with the CEO of cellular phone-maker Nokia, Gates suggested that Microsoft could retool its Office software to work better with Microsoft products than with Palm.

          "We really need to demonstrate to people like Nokia why our PDA will connect to Office in a better way than other PDAs, even if that means changing how we do flexible schema in Outlook and how we tie some of our audio and video advanced work to run only on our PDAs," Gates wrote.

          Microsoft co-founder Paul Allen's name also came up during today's hearing. According to Jackson, lawyers for Allen had sent a letter complaining that Allen's Microsoft holdings would be affected by the proposed government breakup plan. The letter was not publicly released.

          (Aaron Pressman writes for The Industry Standard. Industry Standard Staff writer Keith Perine contributed to this report.)

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