WASHINGTON -- A Justice Department lawyer said the government won't retreat from its plan to break up Microsoft Corp. but told a federal judge some changes sought by the company "seem to make sense" and asked the court to delay its ruling.
U.S. District Judge Thomas Penfield Jackson gave the government until Monday to respond to changes in the proposed breakup plan sought by Microsoft in a filing this week, and gave the software maker until Wednesday morning for its final response.The Justice Department and 17 states sought the short delay "to comment on Microsoft's specific suggested changes, both to determine whether there may be a few we can accept without undermining our proposed remedy, and also to offer our reasons for urging that the others be rejected," a Justice
Department spokeswoman said.
Other government officials said the changes under consideration were minor and wouldn't significantly alter the proposed decree, which calls for the company to be split into two entities, one
built around the monopoly Windows operating system and another controlling Microsoft's dominant Office software and its Internet businesses.
Among changes under consideration, one official said, is an extension of the time Microsoft is given in the decree to submit its own detailed breakup plan. The government's current proposal gives Microsoft four months; the company wants 12 months.
Microsoft's lawyers this week asked for numerous changes in the proposed decree, ranging from wording changes of little consequence to alterations that would ease key provisions. But they also said they don't believe that such an "extreme and damaging" remedy would be sustained by an appeals court.
If the judge does order a breakup, he is likely to stay that portion of the order from taking effect pending the appeal by Microsoft, which could take a year or more. But tough, temporary restrictions on Microsoft's business practices would also be imposed, and those may be harder for Microsoft to overturn on appeal.
The judge has also said he would welcome a motion by the government for a direct appeal to the Supreme Court, which is permitted in major antitrust cases. Many government officials favor a direct appeal to the high court, but a decision to do so would be made by the U.S. Solicitor General, not the antitrust enforcers.
In a telephone conference call that included Judge Jackson, David Boies, the lead trial counsel for the government, said the government wanted simply to respond to Microsoft's proposed changes in the language of the decree and didn't plan to submit a brief or answer filings Microsoft made this week arguing against the proposed breakup.
"From a quick review (of the proposed changes) some number of those seem to make some sense to us, and we would like the opportunity to go through those in detail," Boies said.
Microsoft's stock, which has lost nearly half of its value in the past five months. An influential analyst, Rick Sherlund of Goldman Sachs, said earlier in the day that the stock could recover gradually after a ruling and with the announcement of Microsoft's Internet strategy set for June 22. But "business is still comparatively sluggish for the company," he wrote.
At Microsoft's headquarters in Redmond, Wash., officials Thursday staged a half-day dress rehearsal for the Internet-strategy announcement later this month. The event, which had been planned for Thursday, was to be a day of speeches and demonstrations by top company executives for hundreds of analysts and journalists.
Last week, Microsoft abruptly postponed the event, saying it didn't want a court ruling to draw attention away from its strategy, dubbed "Next Generation Windows Services." The strategy is expected to be subject to intense legal scrutiny by antitrust enforcers wary of Microsoft extending its monopoly to new markets.
Nonetheless, about 1,000 employees saw a run-through of the event Thursday at Microsoft's conference center on its Redmond campus, while thousands of others watched a video broadcast on their desktop computers at work, an executive said.
The event included presentations by Chief Executive Steve Ballmer, Chairman Bill Gates and Group Vice Presidents Paul Maritz, Bob Muglia and Rick Belluzzo. The officials demonstrated some new, Web-based products and services, but none will be on the market anytime soon, the executive said.
The new strategy seeks to adapt existing Microsoft software to the Internet. Gates has said, however, the new strategy would be "doomed" if Microsoft were broken up.