Comment by the Microsoft Working Group

Comment by the Microsoft Working Group on the reply by the States and US Justice to Microsoft's Proposed Remedies

Microsoft was required by Judge Jackson to make a remedy proposal that addressed the violations found by the Court, but we argue today that the company did nothing of the sort. Instead, Microsoft offered a cosmetic remedy that would have virtually no competitive significance.

The Microsoft proposed remedies would neither undo the harm that Microsoft inflicted on competition nor prevent Microsoftfrom illegally using its monopoly power to inflict similar harm in the future.

On April 28, the States and US Justice filed an effective set of proposals to address the Court's conclusion that Microsoft violated the Sherman Act by a wide pattern of exclusionary conduct that injured rivals, raised entry barriers, impaired consumer choice, and retarded innovation. Microsoft's reply attempts to avoid the need for meaningful relief by pretending that its conduct had no such harmful effect - contrary to the evidence at trial and the Court's explicit findings.

We argue that, given Microsoft's failure to come to terms with the Court's rulings, it is now more apparent than ever that structural relief recommended by 17 states and the USDOJ - accompanied by interim conduct remedies needed to allow structural relief to work - may be the only remedy that has a chance of ending Microsoft's persistent unwillingness to abandon its widespread use of unlawful practices to maintain and extend its Windows monopoly.

What remedy does Microsoft propose to undo the damage to competition caused by its past illegal conduct? Nothing. And Microsoft offers no factual support for any of its objections to the governments' proposed remedies.

Iowa Attorney General Tom Miller, leader of the Microsoft Working Group, said: "Apparently, Microsoft is still in denial. It has yet to face up to the harm it has done, and it willfully misunderstands what the remedy is for. The purpose of the remedy is to restore to the marketplace the competitive dynamic that Microsoft has suppressed. Restoring competition is the only way to promote innovation and protect consumers. The remedy the States and the federal government have proposed will do that, without punishing Microsoft or harming Microsoft's shareholders."

"Microsoft last week proposed a cosmetic remedy wrapped in a rhetorical attack on the States and Federal enforcers," Miller said. "With our filing today, we are meeting rhetoric with reality."

The brief filed jointly by the States and US Justice tackled numerous positions taken by Microsoft in response to the government's proposed remedies, including:

Microsoft's narrowly-framed proposals would not eliminate the tying of products which allowed the company to destroy Netscape as a competitor.

Microsoft asserts that a new applications company could not work with an independent Windows company because the two need to be closely integrated. Today's brief pointed out that during the trial and publicly Microsoft stated that independent software developers were on the same footing as Microsoft applications developers.

Microsoft says now that applications and operating system units must be integrated. But during the trial and in numerous public statements, Bill Gates and others close to Microsoft, including the authors of two books cited by Microsoft's expert at trial, tout that the company gains efficiencies because it is organized into separate, product-oriented teams - consistent with the remedy proposed by the States and USDOJ.

"The joint State/Federal proposal is a tailored approach to the problems created by Microsoft's illegal conduct," Miller said. "It will level the playing field, engender greater consumer choice, and touch off an explosion of innovation."

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