Microsoft Proposes Alternate Remedies

Microsoft Corp. Wednesday took another swipe at the Justice Department and more than a dozen states which two weeks ago called for the software giant to be split.

In a court filing submitted to U.S. District Judge Thomas Penfield Jackson, Microsoft (MSFT) proposed several changes to existing business practices that it hopes will settle a sweeping antitrust probe brought by the federal government and 19 states.

Two weeks ago, Justice and 17 of the 19 states, submitted to the court their suggestions for a remedy, calling for the company to be split. One company would develop and market software applications and the other Microsoft’s dominant Windows operating system.

On Wednesday, Microsoft specifically offered to:

  • Allow computer makers to either delete the Internet Explorer icon from the Windows desktop and start menu, offer their own Internet sign-up process in the initial Windows boot sequence, display icons for non-Microsoft platform software products on the Windows desktop, or configure non-Microsoft Web browsing software as the default browser.
  • Avoid canceling agreements with computer makers who promote software from other companies.
  • Agree not to prohibit computer makers from displaying software from competitors on the desktop, institute a new Internet sign-up procedure that would allow users to pick their own browser, delete the Internet Explorer icon from the desktop and establish a competitor’s browser as the default browser on a machine.
  • Agree not to cancel existing contracts with any of the 20 largest computer makers before giving them prior written notice along with 30 days to address any complaints
  • Not promote another company’s product on the desktop in exchange for agreements to limit distribution of software from Microsoft competitors
  • Make available to independent software vendors timely access to the Windows application programming interfaces needed to write software capable of running on Windows
  • Agree to continue making older versions of Windows available to computer makers at the same royalty rate as current operating systems

Microsoft suggested the restrictions remain effective for four years instead of the government’s suggestion of 10.

In a statement released after the filing, the Justice Department criticized the proposals, saying it “fundamentally fails to repair the damage to competition caused by Microsoft’s illegal acts, or to prevent Microsoft from committing similar violations in the future.”

Microsoft President Steve Ballmer reiterated his belief that a breakup of the company would harm consumers. He went on to say the government’s suggested conduct remedies would be just as damaging.

“The government’s proposals really represent government regulation of software design and an unwarranted taking of Microsoft’s intellectual property,” he said.

Microsoft Wednesday proposed a schedule that could allow it more time to prepare for the remedies phase of its antitrust trial than it had to prepare for the main trial itself.

District Court Judge Thomas Penfield Jackson ordered Microsoft to submit its own plan and schedule after ruling April 3 that the company broke U.S. antitrust law by abusing its monopoly in operating systems for personal computers.

Microsoft sought time to prepare for an extensive hearing on possible remedies, with more time to prepare for more severe remedies.

If the judge considers a government proposal to break up the company, Microsoft wants to begin hearings December 4. The seven months of preparation would be more than the four months that elapsed between the complaint and the trial.

If the judge considers all proposed government conduct remedies, but dumps the break-up proposal as Microsoft has asked, the firm would be ready to start Oct. 2.

If thej

udge wants to consider government conduct remedies, except for a provision that the company permit customers to inspect its source code “at a secure facility”, then Microsoft said it would be ready to start on Aug. 7.

If the judge rejects the government proposals entirely and issues Microsoft’s proposed remedies as a permanent injunction, then the firm would accept that decision without argument. In that case, Microsoft would immediately go to a higher court to seek a reversal of the verdict.

Alternatively, the judge could accept the Microsoft proposal as a preliminary injunction. Microsoft said it would appeal the injunction while the trial continued.

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