Judge Abruptly Ends Microsoft Antitrust Proceedings

The federal judge overseeing the government's antitrust case against Microsoft Corp. closed proceedings in the case on Wednesday, indicating he would side with the government's proposal to either break up the software giant or impose significant restrictions on the company's business practices.

After a full day of proceedings, US District Court Judge Thomas Penfield Jackson abruptly called an end to the drawn-out proceedings, asking the government to polish its final judgment and giving the software giant 48 hours to object.

Today's action appeared to take both sides in the case by surprise, coming less than a month after Jackson ruled that Microsoft violated federal antitrust law by illegally preserving its monopoly in the computer operating systems market. That ruling also found Microsoft used its dominance to try to control the Internet browser market.

Heading into today's hearing, Microsoft had hoped to learn just how serious Jackson was considering the government's plan to break the company up into two or more parts. The Justice Department and 19 other states that brought the suit have asked that Microsoft be split into two companies, one that handles the company's operating system and another that manages Microsoft's Office applications and Internet browser software.

During the hearing, both sides argued their case, with the government's attorneys contending that Microsoft was simply rehashing its objections in an attempt to delay the inevitable. Justice lawyers said their breakup plan would force to two sides to forge alliances with former competitors to compete with one another.

But perhaps the most significant development was Judge Jackson's stated interest a third-party amicus brief which recommended the company be broken into three parts, the third part being a company to handle Microsoft's Internet Explorer browser. Jackson called the government's two-part breakup plan an invitation simply to "create two monopolies, both of which would be dominant."

As the session ended, Microsoft filed an order with the court outlining how it would like to respond to the government's case.

Microsoft's attorneys had planned to ask for an additional six months to prepare a legal defense against the government's breakup remedy, and toward the end of the day submitted an order detailing how it would respond to the government's case.

Yet after more than four hours of proceedings, Jackson said he wanted to wrap things up, growing visibly irritated with Microsoft attorneys.

"This case has been pending for more than two years!" Jackson boomed.

Shortly thereafter, the courtroom cleared out and Microsoft wasted no time in calling the judge's actions grounds for victory when the company takes its case to the appeals court.

"We are going to base our appeal on numerous issues of both procedure and substance, and we are confident of prevailing on both," said Microsoft lead attorney John Warden.

Specifically, Microsoft is expected to appeal in part based on the fact that they were not able to depose government witnesses before the hearings were called to a close, primarily because they thought they had ample time to do so.

But David Boies, the Justice Department's special trial counsel, said Microsoft was given several opportunities to depose the government's and its own witnesses, but did not.

When asked whether the Justice Department's final proposal would include the plan to divide the company into three separate entities, Boies was noncommittal, saying it would be taken into consideration.

Newsbytes notes, however, that the order submitted today by Microsoft's attorneys would have called for Microsoft Chairman Bill Gates and President and CEO Steve Ballmer to testify on the company's behalf.

Robert H. Lande, a law professor with the University of Baltimore called today's decision a "complete surprise," both in its suddenness and its implications for the case's future appeal.

"Judge Jackson said the government could go further and have three companies rather than two, but this is mind boggling," Lande said. "I never thought we'd be talking about this issue. But it certainly gives Microsoft a leg to stand on in appeal."

Paul Rothstein, a professor of law at Georgetown University and a Microsoft legal consultant, said all signs indicate that Judge Jackson will adopt a majority of the Justice Department's final proposal.

"He could very well adopt all of the government's measures, and he has certainly indicated that he will adopt a lot of the government's remedy," Rothstein said. "On the other hand, it could be at the last minute that he drops the breakup part, but we won't know until he enters the written proposal."

Rothstein added he believed the judge would waste no time in reaching his decision.

"I think a decision is very imminent now, and this all could be played out within two weeks or so," Rothstein said.

Earlier in the day, the government released sealed documents that seemed to bolster the Justice Department's case that the company pursued a strategy of shutting down competitors at any cost.

In a series of e-mail exchanges between Gates and fellow Microsoft executives, Gates talked about adapting the company's Outlook e-mail program to become more compatible with their "personal desktop assistant," Microsoft's answer to the hugely popular "Palm Pilot" handheld devices.

"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.

Reported by Newsbytes.com, http://www.newsbytes.com.