Archive | May 1, 2000

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web posted May 1, 2000

Government proposes Microsoft split

The Justice Department and a group of state attorneys general asked a federal court on April 28 to split Microsoft into two separate companies, a move that could reshape competition in the software industry.

The Justice Department and 17 of the 19 states that had filed a landmark antitrust lawsuit against Microsoft proposed the split in a joint proposal filed with District Judge Thomas Penfield Jackson. Earlier last month, Jackson ruled that Microsoft had maintained its monopoly power for PC operating systems by anticompetitive means and attempted to monopolize the Web browser market.

Ohio and Illinois parted with the other 17 states by recommending that the court try to rectify Microsoft's anti-competitive behavior through restrictions on its business practices. Those two states advocate breaking up Microsoft only if those restrictions fail to restore competition in the operating system market within three years.

"We are proposing these remedies because the law was broken - as Judge Jackson concluded so powerfully - and because the violations seriously harmed consumers and competition," said Iowa Attorney General Tom Miller, head of the Microsoft working group of 19 states.

The joint proposal calls for Microsoft to be split into two competing entities - one to contain its Windows operating systems, which run most of the world's personal computers, and another to contain the rest of its business lines, including the popular Microsoft Office suite of applications. Under the proposal, the two companies would be prohibited from recombining for at least 10 years, and they would have separate boards of directors.

The operating systems company would be able to retain the existing code for Microsoft's Explorer Internet browser, but would have to develop its own browser to compete with Explorer in the future.

Microsoft would have to submit a breakup plan within four months after Judge Jackson rules. The federal government and the states would have 60 days to submit objections to Microsoft's plan, and Microsoft would have 30 days to respond to those objections.

The proposed split wouldn't go into effect until Microsoft had exhausted its appeals to higher courts. However, the Justice Department and the states proposed a series of restrictions to Microsoft's business practices that would be implemented immediately - if approved by Judge Jackson - and left in place for three years.

"Under our proposal, neither ongoing government regulation nor the self- interest of an entrenched monopolist will decide what is best for consumers," said Joel Klein, assistant attorney general and the nation's top anti-trust enforcer. "Instead, consumers will be able to choose for themselves the products they want in a free and competitive marketplace."

"These proposals will have a chilling effect on innovation in the high technology industry," Microsoft Chairman Bill Gates said in a statement. "Microsoft could never have developed Windows under these rules. Looking forward, this kind of regulation would make it impossible for Microsoft to develop the next generation of great software."

The proposed restrictions on Microsoft's business practices would prohibit the company from punishing computer companies working on products that compete with Microsoft's. Along the same lines, Microsoft wouldn't be able to favor computer companies and software developers that helped Microsoft to exclude competitors.

Microsoft would be prohibited from bundling its operating system with its browser software unless computer users or computer makers could remove the browser. Finally, the software giant would have to disclose technical information to competing software developers that would allow those developers to write programs compatible with Windows.

"These conduct restrictions are necessary to allow the structural remedy sufficient time to restore competitive conditions in the software industry," Justice's Klein said. "These provisions include prohibitions on the conduct specifically found illegal by the federal district court."

The proposed remedy against Microsoft marks the first time that the government has tried to break up a major corporation since the Bell System telephone monopoly was divided into eight companies in 1984. If the breakup becomes a reality, it could cause significant shifts in the dynamics of the computer and software industries. Securities analysts are unclear about how it would impact the software giant's current $356 billion market value.

Under Judge Jackson's current schedule, the Redmond, Wash.-based software giant has until May 10 to respond to the remedy proposed by the federal government and the states. The federal government and the states then have until May 17 to file a rebuttal, and Judge Jackson is scheduled to hold a hearing on the proposed remedies on May 24. However, Jackson may extend that timetable because of the complexity and severity of the Justice Department's proposed remedy.

Even if Judge Jackson backs the proposal to split Microsoft into two companies, such a division is far from becoming reality. The company has vowed to have the case reviewed by an appeals court, which had previously overturned a ruling by Judge Jackson that is a central issue in the antitrust battle. In June 1998, the appeals court wrote that Microsoft could combine its Web browser software with its Windows operating system without facing charges of tying if it could show a benefit to consumers from integrating the two products.

Clinton responds to ethics complaint

In documents filed April 28, President Bill Clinton claimed he did nothing wrong in the course of the Paula Jones sexual harassment lawsuit, and he argued against a move by a legal foundation that seeks to have him disbarred in his home state of Arkansas.

The documents were filed in response to a complaint that sought to revoke Clinton's license to practice law in Arkansas, according to the conservative foundation that earlier filed the action with the Arkansas Supreme Court Committee on Professional Conduct.

Matthew Glavin, president of the Atlanta-based Southeastern Legal Foundation, described Clinton's 85-page response as a "pathetic attempt to defend the indefensible."

Details of that response were not made available.

The foundation has seven days to respond to the president's filing.

"In that response, we will make it clear that the case for disbarment is stronger than ever," Glavin said in a statement.

Glavin's group has accused Clinton of making false statements and obstructing the legal process in the Paula Jones sexual harassment case. He should be disbarred for such conduct, the foundation argues.

After the Arkansas Supreme Court Committee staff receives the foundation's response, they will send the original complaint and each side's responses to the seven committee members. Glavin said the members are expected to issue a decision about Clinton's law license by their regularly scheduled meeting on May 18 -- but they could choose to release their decision earlier.

The committee could clear Clinton or recommend sanctions ranging from a mild caution to a disbarment proceeding in circuit court. From there, a case could be appealed to the state Supreme Court.

Under Arkansas' bar rules, the president's response is confidential unless he chooses to waive this privilege. He has not. The foundation has waived confidentiality for its materials, but cannot make public its copy of Clinton's response.

"If he is so convinced of his innocence, why not let this be public?" Glavin said.

"We have no intention of putting it on the public record," said White House press secretary Joe Lockhart during his regular briefing with reporters the day of Clinton's response.

When asked why not make the filing public, Lockhart said, "Because ... the bar has set this up with a set of procedures and we're going to follow them."

Thousands march in largest U.S. protest over Elian

Cuban-Americans gathered in the thousands in the Little Havana area of Miami on April 29 for what organizers called the biggest demonstration yet against Easter Saturday's forced removal of Elian Gonzalez from the home of his Miami relatives.

"This is a moment where the three generations of Cubans that are here are coming together in favor of supporting the child Elian and denouncing the aggressive way that they entered his home," said Andres Nazario Sargen, of Alpha 66, an anti-Castro group.

Police believed about 80,000 took part in the peaceful protest by Cuban-Americans near Miami's Bay of Pigs Memorial. The protest began at 3 p.m. EDT and began breaking up just over two hours later.

Exile leaders spoke on Spanish radio all week, urging people to participate in the rally.

Leading up to the protest, Elian's great-uncle Lazaro Gonzalez made a plea for calm.

"Elian is gone for now and my heart is broken," he said in a statement released the day before. "But South Florida must stay united. We cannot allow this tragedy to destroy our community."

Police stayed visibly distant from the chanting demonstrators, many of whom carried signs denouncing President Clinton and Attorney General Janet Reno.

Police cordoned off 23 blocks of the main route along Calle Ocho, or Eighth Street, as the crowds of people, many dressed in black and waving Cuban and U.S. flags, marched in formation.

Leading up to the protest, Elian's great-uncle Lazaro Gonzalez made a plea for calm.

"Elian is gone for now and my heart is broken," he said in a statement released Friday. "But South Florida must stay united. We cannot allow this tragedy to destroy our community."