Microsoft moves to fight breakup ruling

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Microsoft Corp. executives wasted little time responding to U.S. District Judge Thomas Penfield Jackson's June 7 decision to break the software giant in two. Microsoft filed a request for a stay in U.S. District Court, Washington, and a notice of appeal with the U.S. Court of Appeals for the District of Columbia Circuit. The software giant now embarks on what could be a lengthy course of action, though its business practices--including marketing initiatives--could face extensive court-mandated changes in three months if a stay isn't granted.

Microsoft has four months to respond with a counterplan, but Judge Jackson also imposed business conduct restrictions that will take effect in 90 days unless a stay is granted. Microsoft executives said at a news conference after the ruling that they believe the court will approve a stay well before the end of the 90-day period.

The appellate phase of the case is expected to take a "number of months, at least a year or longer," said Microsoft Chief Counsel Bill Neukom. The process could take a lot longer, however, if the government tries to take the case to the U.S. Supreme Court. The high court Court could take several months to decide whether it will even hear the case.

Microsoft executives said they're confident they will win the case on appeal. Chairman and Chief Software Architect Bill Gates said: "This is the beginning of a new chapter in this case. We will be appealing this decision, and we believe we have a very strong case on appeal. We believe this ruling is inconsistent with the past decisions by the appeals court, with fundamental fairness and with the reality of the marketplace. Consumers every day see more competition, lower prices and an economy full of innovation."

Those statements by Microsoft's founder could resurface in new Microsoft advertising making its case to the public, though the company didn't immediately respond on whether such reactive advertising would break June 8.

Mr. Gates said that while Microsoft is pursuing a stay, the company will continue full speed ahead on developing Next Generation Windows Services. Microsoft is expected to outline its vision for Web-distributed software and integrated services on June 22, rescheduled from June 1 because of the pending antitrust decision.

The latest phase of the antitrust battle is likely to spawn a new wave of advertising by Microsoft, which used its top executives, Mr. Gates and President-CEO Steve Ballmer, in TV spots by McCann-Erickson/A&L, San Francisco and New York, after the original April 3 decision by Judge Jackson. Judge Jackson then ruled that Microsoft exerted monopoly power in the software industry.

The June 7 ruling to split Microsoft into two companies came as no surprise. One of those companies would encompass Microsoft's operating system business and the other company would be for applications such as Microsoft's popular Office software suite and properties such as MSN. The final decision in the case comes after more than two years of legal wrangling.

Copyright June 2000, Crain Communications Inc.

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