Article 111 of 200
Judge suggests 3 Microsofts
Boston Herald
Page 034
(Copyright 2000)


A federal judge in Washington hinted yesterday that he likes a proposal for breaking Microsoft Corp. into three separate firms, not the two recommended by Justice Department trustbusters. But economic and legal experts say such a move could jack up the price of personal computing.

Government antitrust lawyers have proposed breaking Microsoft into a computer operating systems company and one that makes and markets all of Microsoft's other products, from word processing and spreadsheet programs to Internet applications. Microsoft argues that plan would hurt shareholders and consumers and retard technological advances.

Yesterday, U.S. District Judge Thomas Penfield Jackson asked government lawyers about an alternative breakup plan that would also divide the nonoperating systems firm into one for PC programs and another for Microsoft's Internet Explorer Web browser.

Jackson ruled last month that Microsoft broke antitrust laws to guard its PC operating systems monopoly, but yesterday he questioned whether splitting Microsoft into just two companies would suffice or merely create a pair of monopolies with little benefit to consumers.

Massachusetts is one of 17 states supporting the Justice Department breakup proposal.

Outside observers panned the idea of carving a third Internet firm out of the Redmond, Wash., software giant. Nicholas Economides , who teaches economics at New York University's Stern School, said the idea "seems like an unfeasible solution."

"Microsoft Explorer is given away for free. An Internet Explorer company would have to charge customers. That would mean everyone would pay $40 or $50 more to get access to the Internet," he said.

Jackson gave government trustbusters until tomorrow to update their proposal.

"Nobody thinks that a browser company on its own makes any sense," said Rick Rule, a former Justice Department antitrust chief who is a Microsoft consultant.

Economides also suggested that Jackson should give Microsoft more time to respond to the breakup plan, or risk helping Microsoft's planned appeal.

"That sounds to me that he's very keen to make a quick decision," he said. "If the process is done too quickly it will give Microsoft an easier time to appeal a decision on procedural grounds."

Rule didn't disagree. He said Microsoft would appeal any breakup order, no matter when it comes down.

"Nothing today lessened Microsoft's chances of prevailing on appeal," Rule said. He said trustbusters "really have no idea what kind of impact their remedy proposal would have on the marketplace."


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