New York Files Remedy Proposal In Microsoft Case

State Attorney General Spitzer, joined by 16 other States and the United States Department of Justice (DOJ), today formally proposed a remedy for Microsoft's antitrust violations in the personal computer operating systems market. The proposal, which was filed before Judge Penfield Jasckson in the United States District Court for the District of Columbia, asks the Court to order Microsoft to prepare a plan which reorganizes the company into two parts.

One part of the company would own the operating system business, including the Windows operating system. The other would own the rest of Microsoft's current businesses, such as Office, Internet Explorer, which is Microsoft's web browser, and MSNBC. In addition, the proposal asks Judge Jackson to stop a variety of business practices that Microsoft has used to bolster its monopoly position in the operating systems market.

The joint proposal was filed twenty-five days after Judge Jackson found Microsoft to be in violation of federal antitrust law, as well as New York State's antitrust law -- the Donnelly Act.

I"The State's joint effort with DOJ is a measured response to Microsoft's monopoly power and illegal business behavior," said AG Spitzer. "The restructuring of Microsoft is fully justified by the Court's factual findings and legal conclusions and is supported by long-standing judicial precedent. Reorganization will actually avoid excessive judicial regulation of this industry. We want to rely on market forces, to the maximum extent possible, for providing the incentives that will allow the two companies to bring innovative, new products to consumers."

Attorney General Spitzer pointed out that the Court had previously found that Microsoft's monopolizing tactics harmed innovation and suppressed the development of new software products that might compete with Microsoft. "Under our proposal, anyone who uses a computer will be benefitted by opening up the market to increased innovation. I expect that, in the not too distant future, we will have a blossoming of new computer software products, with new features--much as we had in telephones after breaking up AT&T. This will remind us again of the dangers of leaving a monopolist in charge of the pace of innovation."

Other provisions of the proposed decree would require:

  • Non-discriminatory dealing: Microsoft can no longer favor computer companies and software developers who are willing to play ball with Microsoft by helping Microsoft to exclude competitors.
  • No retaliation: Microsoft can no longer punish computer companies that want to sell products that compete with Microsoft's.
  • Unbundling of operating system products: Microsoft can't force consumers to take a Microsoft product when they would prefer a competitor's.
  • Information disclosure: Microsoft must disclose information to competing software developers that will allow these companies to design their products so that they will operate better with Windows.