JUDGE ORDERS MICROSOFT SPLIT

A federal judge ordered that Microsoft be split into two companies, the largest court-ordered breakup since the 1984 dismantling of telephone giant AT&T. Under the order, Microsoft would be divided into a PC operating systems company, and a company that holds the remainder of its business, including its dominant Office suite of applications, the Internet Explorer Web browser and other businesses. Microsoft has been ordered to submit a divestiture plan within four months. Microsoft has vowed to appeal the decision, a process which could take up to two years, during which time the ordered split is likely to be postponed. The breakup order, handed down by U.S. District Court Judge Thomas Penfield Jackson, also imposed a series of restrictions on Microsoft's conduct which would take effect 90 days from now and remain in place for 3 years as the case moves through the appeals process. Microsoft is likely to ask an appeals court to issue an injunction against those measures.

The vast majority of the world's desktop PCs run some version of Microsoft's Windows operating system. In his findings of fact in the case, Jackson said the company has used that prodigious market power to harm companies that pursue initiatives that could intensify competition against one of Microsoft's core products. The restrictions are designed to prevent Microsoft from continuing to do so, Jackson said. They also are meant to prevent Microsoft from favoring computer manufacturers and software developers that help it exclude competitors. The provisions include: Requiring Microsoft to license Windows to PC makers under uniform prices and terms according to a schedule accessible to the government and those PC makers; Barring Microsoft from interfering with the way PC makers set up start-up screens, the Windows desktop, preferences, and Internet connection wizards; Requiring the company to disclose technical information about its operating systems to independent hardware and software companies so that those companies can design products that are compatible with Windows; Prohibiting Microsoft from degrading the performance of "middleware" made by other companies. Middleware is software that operates between an operating system and another type of software application; And restricting the company from binding middleware products, such as a Web browser, to its Windows operating system unless access to that middleware can be removed by PC makers or end-users.

A House Divided

In his findings of fact in the case, Jackson also concluded that Microsoft attempted to monopolize the Web browser market and unlawfully tied its Web browser to its operating system when it issued Windows 98. Microsoft felt especially threatened by Netscape's Web browser and Sun Microsystems' Java programming language because they could be used to write applications that can run on multiple operating systems, Jackson found. Under the breakup order, Microsoft's operating systems business would be prohibited from distributing new versions of Microsoft's Web browser software. The split companies also would be barred from sharing officers and directors, of one company would be prohibited from owning stock in the other. The separated companies also would be barred from sharing important programming tools called Application Programming Interfaces unless those APIs were also made available to independent software and hardware vendors.