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Trade group backs Microsoft breakup
The association suggests options if giant loses case

SHARE Trade group backs Microsoft breakup
The association suggests options if giant loses case

WASHINGTON -- A prominent trade group in the technology industry, traditionally loath to involve the government in its business, is endorsing in a secret report the breakup of Microsoft if the company loses its landmark antitrust case.

It's unclear how the proposal might affect government lawyers, who are pondering what to do about the software giant as the trial moves into the final stages -- with the growing likelihood of an eventual ruling at least partly against Microsoft.Outside the bitter courtroom fight, there is genuine apprehension in Washington about tinkering with the awe-inspiring success of a company that employs 27,000 people and recorded $14.4 billion in sales last year and whose Windows software runs most of the world's personal computers.

The Software and Information Industry Association made its recommendations in a report sent to Justice Department lawyers after a vote by its board.

The group proposes what some legal experts call the "death penalty" for Microsoft if it loses -- splitting it up into companies selling separate products, such as Windows software and Internet content, or breaking it into three or four "Baby Bills" or "Mini-Microsofts," each with identical products.

The group said a breakup "deserves the most careful attention of the government and the court." But it doesn't distinguish which breakup plan it recommends, calling it "ultimately an antitrust policy question with no clear answer."

Microsoft says it is premature to consider choices it could face. Spokesman Greg Shaw called the described remedies "little more than wishful thinking by our competitors."

If the government prevails, its once-bitten lawyers will be mindful of their own previous, failed efforts to muzzle Microsoft.

Just a few months after Justice last forced Microsoft to agree to tone down its aggressive behavior, Bill Gates met with executives of a business ally who asked him about his apparently uncharacteristic surrender.

"This antitrust thing will blow over," the company's billionaire chairman answered, according to the meeting's notes. "We haven't changed our business practices at all."

That 1995 consent decree, endorsed by the same judge in the ongoing trial, didn't stop Microsoft from bundling its Internet software into Windows, a central issue in the current case.

The chairman of the Federal Trade Commission, Justice's antitrust sister agency, last week urged the government to "proceed cautiously in breaking up" dominant high-tech companies like Microsoft, known in the industry as an 800-pound gorilla.

The only way to level the playing field "is to kill the gorilla, and the government doesn't want to do that," said Michael Cusumano, co-author of a book on Netscape's fight with Microsoft.

Whatever they decide, government lawyers will need to persuade U.S. District Judge Thomas Penfield Jackson, who's expected to issue a verdict this summer.

"He sits back and realizes, they want me to change the future direction of this industry for the next 20 years," said Kovacic. "And he realizes this is maybe the most important industry we have."

The association's breakup proposal is significant because Microsoft is one of the biggest companies in the 1,400-member group, formerly known as the Software Publishers Association. Its board includes executives from Netscape, Oracle Corp. and IBM Corp.