WASHINGTON — While continuing to reject the antitrust findings against it, Microsoft Corp. on Wednesday offered a series of narrow restrictions on its behavior that it said would be more appropriate remedies than breaking up the company.
Microsoft also asked the judge to throw out the government's breakup proposal immediately, arguing that "the laws and the facts do not support such a radical step."
Microsoft's counterproposal is a four-year plan largely governing its relations with computer makers and software developers.
In its court filing, Microsoft said that if the government's breakup plan were adopted, its employees might "leave the company in droves." If that were to happen, Microsoft continued, "the company's entire business would be destroyed."
Such passages seemed clearly intended to warn U.S. District Court Judge Thomas Penfield Jackson that splitting up Microsoft would be a dangerous gamble to take with a pillar of the nation's high-technology economy.
"We believe there is no basis for the government's unprecedented breakup proposal," said Bill Gates, the company's chairman, "and we are hopeful that the court will dismiss this excessive demand immediately."
The motion for summary rejection was added unexpectedly to the company's formal response to the remedy proposal offered last month by the Justice Department and 17 states. In the motion, Microsoft argued that since the company achieved its monopoly position by legal means, the government has no right "to dismember Microsoft."
After four years of investigation and 19 months of litigation, the Justice Department and 17 state attorneys general proposed on April 28 that Microsoft be broken into two companies. One would hold the Windows operating system, the other everything else, including the Office suite of application programs like Word and Excel. Two of the 19 states joining in the suit — Ohio and Illinois — advocated steps short of a breakup.
Jackson ruled on April 3 that Microsoft was in wide violation of the nation's antitrust laws. But if he chooses to break up the company, it would be one of only a few instances the last 100 years when a major national company was broken apart as a result of an antitrust case — and the only one resulting from court order rather than a consent decree.
On May 17, the federal and state governments are entitled to reply to Wednesday's filing from Microsoft. And then during a remedies hearing on May 24, both the government and Microsoft will offer arguments in support of their proposals.
In a statement Wednesday, the Justice Department said that "Microsoft's proposal is ineffective and filled with loopholes." Among the loopholes, the department added, the proposal would not prevent "attempts to divide markets with competitors; retaliation against personal computer manufacturers and software developers that support non-Microsoft technologies; or tying to require PC manufacturers to ship other Microsoft products with Windows."
And Iowa Attorney General Tom Miller, who leads the states that are joining in the suit, said: "The remedies proposed are inadequate. These measures would not have prevented the serious violations of law found by Judge Jackson, and they are not adequate remedies to assure that the law is not broken in the future."
In the past, Microsoft's leaders have repeatedly said there was a "church and state" separation within the company between the Windows group and the others that develop applications programs like Office.
But in Wednesday's filing, Microsoft said: "Cross pollination between engineers working on different products such as Windows and Office has led to numerous innovations."
It added that the company's success and attendant benefits for consumers "would not have been possible but for Microsoft's unified structure, which enables Microsoft to conceive and implement new ideas that span operating systems and applications."
As part of Wednesday's filing, Microsoft offered its own proposed remedies, a collection of rules that would modify the company's conduct while reiterating its conviction to appeal the case, even if its remedy proposal were accepted.
Many of the company's proposals are similar to those in the government plan, though they are more narrowly focused on specific complaints raised in the trial. Along with the breakup plan, the government wants to impose about a dozen rules intended to moderate Microsoft's conduct.
Microsoft's proposed conduct restrictions fall far short of the government's, and the company explained: "Courts are not authorized in civil enforcement proceedings to punish antitrust defendants. Instead, relief must extend no farther than is necessary to redress the conduct found to be unlawful."
Still, the proposals included several significant concessions. Among them, Microsoft would have to take these steps:
Agree not to discriminate in the release of technical information about Windows to outside software developers.
Allow computer manufacturers to make "non-Microsoft Web browsing software the default browser on a new personal computer."
Agree not to threaten to withhold a license for Windows from a computer maker featuring products by a Microsoft competitor.
Enter into no exclusive deals that offer other companies favored treatment in Windows in exchange for agreements to feature only Microsoft products.
Agree not to condition the release of its software intended for non-Microsoft operating systems, like Apple Computer's, on the other company's agreement not to distribute or promote competitors' software.
The Justice Department complained in its statement that Microsoft's remedies would not "prevent the company from using its monopoly power in the future to engage in the same kind of illegal behavior to crush new innovations."