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Microsoft's last word
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May 31, 2000: 8:45 p.m. ET
Software giant calls the government's breakup proposal 'defective'
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NEW YORK (CNNfn) - In its last chance to influence the federal judge presiding over its antitrust trial, Microsoft Corp. Wednesday blasted the government's proposal to split the company in two and offered to have additional witnesses testify on the company's behalf.
In a filing made with the U.S. District Court for the District of Columbia, Microsoft repeated its earlier statements that the judge's findings in the antitrust case don't justify the government's proposal to split the company into two separate parts - one for its Windows operating systems and the other for the remainder of its business, including applications such as Office.
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VIDEO
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Microsoft criticized a final government proposal to split the firm in order to prevent future antitrust violations as defective, vague, and ambiguous.
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Now that Judge Thomas Penfield Jackson has received Microsoft's response, he can issue a final ruling at any time, possibly by the end of this week, antitrust lawyers said.
In its filing made Wednesday, Microsoft called the relief requested by the government "extreme and unjustified." The company said that the government's proposed final judgment in the antitrust case is "defective in numerous respects, making the document vague and ambiguous."
"Were the court to accept all of Microsoft's proposed changes, the government's proposed final judgment would be improved, but much of the vagueness and ambiguity would remain because it is inherent in the structure of the document," Microsoft's filing said.
In a separate "supplemental offer of proof," Microsoft offered testimony from seven corporate executives and academics, including the top executives at Compaq Computer, Dreamworks SKG, J.D. Edwards & Co, and GEICO Insurance. However, those witnesses probably will never have a chance to testify because Judge Jackson already has ended hearings in the antitrust case.
Last week Microsoft offered to have 16 witnesses testify on the company's behalf, including Chairman Bill Gates and Chief Executive Officer Steve Ballmer. In a court hearing last Wednesday, Judge Jackson refused to schedule testimony from those witnesses, and the Justice Department described Microsoft's offer as nothing more than a "cynical ploy calculated to raise diversionary issues on appeal."
In a statement issued Wednesday evening, the Justice Department called Microsoft's filing "another effort to posture for appeal."
"Much of Microsoft's filing is patently irrelevant to the question before the court," the Justice Department's statement said. "The filing does not come to grips with the fact that Microsoft has been found to have repeatedly engaged in serious legal violations."
Revisions to government's proposal
Microsoft made a detailed series of revisions to the government's proposed final judgment in the case, but stipulated that those changes don't reflect any agreement with the government's plan or the withdrawal of objections that the company has previously filed with the court.
One of the most significant changes Microsoft suggested was increasing the time it would have to submit a breakup plan after the entry of a final judgment to 12 months from the government's four months.
"The forced breakup of a unitary company like Microsoft is unprecedented, and dividing the company in half would be an enormously difficult task," the company's filing said. "Four months is not remotely enough time to formulate a plan for attempting such an undertaking."
Microsoft's revisions also stated that it is vital for the government to define the term "Internet browser" because the government has proposed to limit the ability of a split-off operating systems business to develop or distribute modified versions of Microsoft's browser software.
In addition, the software maker wants to revise the government's proposal that it treat computer makers equally and that it publish the pricing for Windows on its Web site. The company said that the largest PC maker that would be covered by the government's plan does 40 times the annual unit volume as the smallest one, making equal treatment of all PC companies unfair to the larger companies. If Microsoft sets its pricing for Windows using objective criteria, there is no reason to force the company to publicly disclose its pricing schedule, the company said.
Jackson expected to follow Justice's lead
Judge Jackson is expected to follow the recommendation of the Justice Department and 17 of the 19 states suing Microsoft that the company be split in two, and to adopt a series of restrictions on the company's business practices, those antitrust experts said.
"Unless Microsoft pulls a major rabbit out of its hat today, the judge will  sign off on what the government put in front of him," Dana Hayter, a senior associate at Fenwick & West specializing in antitrust and intellectual property law, said before Microsoft made its filing Wednesday. Hayter worked in the Justice Department's antitrust division between 1994 and 1997 and helped develop the current case against the company.
Legal experts said that the judge likely wants to issue a ruling as soon as possible.
"I wouldn't be surprised to see Judge Jackson rule by the end of this week," said Joe Sims, an antitrust lawyer at Jones Day Reavis & Pogue. "He hasn't shown a lot of patience here recently."
"It certainly seems like the judge is leaning towards ordering a two-way or three-way split of the company and that the ruling will be issued fairly soon," said Steven Salop, professor of economics and law at Georgetown University Law Center. "He wants to get something on the table that could get appealed, since there is an expectation that any remedy he orders will come back to him for refinement."
 Microsoft itself has indicated that it expects Jackson to rule quite soon. Last week, the company postponed its upcoming Forum 2000 conference for analysts and the press because of expectations that a ruling was imminent.
Microsoft was slated to use this forum to provide an update on its "vision, strategy, and technology roadmap," including its plans for so-called Next Generation Windows Services.
The Redmond, Wash.-based company's stock closed down 13/16 at 62-9/16 Wednesday, down 46 percent from its closing price on Jan. 3, as the antitrust case has caused some investors to avoid the stock until the outcome is clear. 
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