The opinion of the court was delivered by: Jackson, District Judge.
These cases are before the Court for disposition of the sole
matter presently remaining for decision by the trial court,
namely, entry of appropriate relief for the violations of the
Sherman Act, §§ 1 and 2, and various state laws committed by the
defendant Microsoft Corporation as found by Court in accordance
with its Findings of Fact and Conclusions of Law. Final judgment
will be entered contemporaneously herewith. No further
proceedings will be required.
The Court has been presented by plaintiffs with a proposed
form of final judgment that would mandate both conduct
modification and structural reorganization by the defendant when
fully implemented. Microsoft has responded with a motion for
summary rejection of structural reorganization and a request for
months of additional time to oppose the relief sought in all
other respects. Microsoft claims, in effect, to have been
surprised by the "draconian" and "unprecedented" remedy the
plaintiffs recommend. What it proposes is yet another round of
discovery, to be followed by a second trial — in essence an ex
post and de facto bifurcation of the case already considered
and rejected by the Court.
Microsoft's profession of surprise is not credible.*fn1
From the inception of this case Microsoft knew, from
well-established Supreme Court precedents dating from the
beginning of the last century, that a mandated divestiture was a
possibility, if not a probability, in the event of an adverse
result at trial. At the conclusion of the trial the Court's
Findings of Fact gave clear warning to Microsoft that the result
would likely be adverse, yet the Court delayed entry of its
Conclusions of Law for five months, and enlisted the services of
a distinguished mediator, to assist Microsoft and the plaintiffs
in reaching agreement on a remedy of some description that
Microsoft knew was inevitable. Even assuming that Microsoft
negotiated in utmost good faith in the course of mediation, it
had to have in contemplation the prospect that, were mediation
to fail, the prevailing plaintiffs would propose to the Court a
remedy most to their liking and least likely to be acceptable to
Microsoft. Its failure to anticipate and to prepare to meet such
an eventuality gives no reason to afford it an opportunity to do
so now.
These cases have been before the Court, and have occupied much
of its attention, for the past two years, not counting the
antecedent proceedings. Following a full trial Microsoft has
been found guilty of antitrust violations, notwithstanding its
protests to this day that it has committed none. The Court is
convinced for several reasons that a final — and appealable —
judgment should be entered quickly. It has also reluctantly come
to the conclusion, for the same reasons, that a structural
remedy has become imperative: Microsoft as it is presently
organized and led is unwilling to accept the notion that it
broke the law or accede to an order amending its conduct.
First, despite the Court's Findings of Fact and Conclusions of
Law, Microsoft does not yet concede that any of its business
practices violated the Sherman Act. Microsoft officials have
recently been quoted publicly to the effect that the company has
"done nothing wrong" and that it will be vindicated on appeal.
The Court is well aware that there is a substantial body of
public opinion, some of it rational, that holds to a similar
view. It is time to put that assertion to the test. If true,
then an appellate tribunal should be given early opportunity to
confirm it as promptly as possible, and to abort any remedial
measures before they have become irreversible as a practical
matter.
Second, there is credible evidence in the record to suggest
that Microsoft, convinced of its innocence, continues to do
business as it has in the past, and may yet do to other markets
what it has already done in the PC operating system and browser
markets. Microsoft has shown no disposition to voluntarily alter
its business protocol in any significant respect. Indeed, it has
announced its intention to appeal even the imposition of the
modest conduct remedies it has itself proposed as an alternative
to the non-structural remedies sought by the plaintiffs.
Third, Microsoft has proved untrustworthy in the past. In
earlier proceedings in which a preliminary injunction was
entered, Microsoft's purported compliance with that injunction
while it was on appeal was illusory and its explanation
disingenuous. If it responds in similar fashion to an injunctive
remedy in this case, the earlier the need for enforcement
measures becomes apparent the more effective they are likely to
be.
Finally, the Court believes that extended proceedings on the
form a remedy should take are unlikely to give any significantly
greater assurance that it will be able to identify what might be
generally regarded as an optimum remedy. As has been the case
with regard to Microsoft's culpability, opinion as to an
appropriate remedy is sharply divided. There is little chance
that those divergent opinions will be reconciled by anything
short of actual experience. The declarations (and the "offers of
proof") from numerous potential witnesses now before the Court
provide some insight as to how its various provisions might
operate, but for the most part they are merely the predictions
of purportedly knowledgeable people as to effects which may or
may not ensue if the proposed final judgment is entered. In its
experience the Court has found testimonial predictions of future
events generally less reliable even than testimony as to
historical fact, and cross-examination to be of little use in
enhancing or detracting from their accuracy.
In addition to its substantive objections, the proposed final
judgment is also criticized by Microsoft as being vague and
ambiguous. Plaintiffs respond that, to the extent it may be
lacking in detail, it is purposely so to allow Microsoft itself
to propose such detail as will be least disruptive of its
business, failing which plaintiffs will ask the Court to supply
it as the need appears.
The final judgment proposed by plaintiffs is perhaps more
radical than might have resulted had mediation been successful
and terminated in a consent decree. It is less so than that
advocated by four disinterested amici curiae. It is designed,
moreover, to take force in stages, so that the effects can be
gauged while the appeal progresses and before it has been fully
implemented. And, of course, the Court will retain jurisdiction
following appeal, and can modify the judgment as necessary in
accordance with instructions from an appellate court or to
accommodate conditions changed with the passage of time. It is
therefore, this 7th day of June, 2000.
ORDERED, that the motion of defendant Microsoft Corporation
for summary rejection of the plaintiffs' proposed structural
reorganization is denied; and it is
FURTHER ORDERED, that defendant Microsoft Corporation's
"position" as to future proceedings on the issue of remedy is
rejected; and it is
FURTHER ORDERED, that plaintiffs' proposed final judgment, as
revised in accordance with the proceedings of May 24, 2000 and
Microsoft's comments thereon, be entered as a Final Judgment
herein.
Plaintiff, United States of America, having filed its
complaint herein on May 18, 1998;
Plaintiff States, having filed their complaint herein on the
same day;
Defendant Microsoft Corporation ("Microsoft") having appeared
and filed its answer to such complaints;
The Court having jurisdiction of the parties hereto and of the
subject matter hereof and having conducted a trial thereon and
entered Findings of Fact on November 5, 1999, and Conclusions of
Law on April 3, 2000;
The Court having entered judgment in accordance with the
Findings of Fact and the Conclusions of Law on April 3, 2000,
that Microsoft has violated & sect; & sect; 1 and 2 of the
Sherman Act, 15 U.S.C. & sect; & sect; 1, 2, as well as the
following state law provisions: Cal. Bus. & Prof. Code & sect; &
sect; 16720, 16726, 16727, 17200; Conn. Gen.Stat. & sect; &
sect; 35-26, 35-27, 35-29; D.C. Code & sect; & sect; 28-4502,
28-4503; Fla. Stat. chs. 501.204(1), 542.18, 542.19; 740
Ill.Comp.Stat. ch. 10/3; Iowa Code & sect; & sect; 553.4, 553.5;
Kan. Stat. & sect; & sect; 50-101 et seq.; Ky.Rev.Stat. & sect;
& sect; 367.170, 367.175; La.Rev.Stat. & sect; & sect; 51:122,
51:123, 51:1405; Md. Com. Law II Code Ann. & sect; 11-204; Mass.
Gen. Laws ch. 93A, & sect; 2; Mich. Comp. Laws & sect; & sect;
445.772, 445.773; Minn.Stat. & sect; 325D.52; N.M. Stat. & sect;
& sect; 57-1-1, 57-1-2; N.Y. Gen. Bus. Law & sect; 340; N.C.
Gen.Stat. & sect; & sect; 75-1.1, 75-2.1; Ohio Rev. Code & sect;
& sect; 1331.01, 1331.02; Utah Code & sect; 76-10-914; W. Va. Code
& sect; & sect; 47-18-3, 47-18-4; Wis. Stat. & sect;
133.03(1)-(2); and
Upon the record at trial and all prior and subsequent
proceedings herein, it is this 7th day of June, 2000, hereby:
ORDERED, ADJUDGED, AND DECREED as follows:
a. Not later than four months after entry of this
Final Judgment, Microsoft shall submit to the Court
and the Plaintiffs a proposed plan of divestiture.
The Plaintiffs shall submit any objections to the,
proposed plan of divestiture to the Court within 60
days of receipt of the plan, and Microsoft shall
submit its response within 30 days of receipt of the
plaintiffs' objections.
b. Following approval of a final plan of divestiture
by the Court (the "Plan")[fn1A] (and the expiration
of the stay pending appeal set forth in section 6.a),
Microsoft shall implement such Plan.
c. The Plan shall provide for the completion, within
12 months of the expiration of the stay pending
appeal set forth in section 6.a., of the following
steps:
i. The separation of the Operating Systems Business
from the Applications Business, and the transfer of
the assets of one of them (the "Separated
Business") to a separate entity along with (a) all
personnel, systems, and other tangible and
intangible assets (including Intellectual Property)
used to develop, produce, distribute, market,
promote, sell, license and support the products and
services of the Separated Business, and (b) such
other assets as are necessary to operate the
Separated Business as an independent and
economically viable entity.
ii. Intellectual Property that is used both in a
product developed, distributed, or sold by the
Applications Business and in a product developed,
distributed, or sold by the Operating Systems
Business as of April 27, 2000, shall be assigned to
the Applications Business, and the Operating
Systems Business shall be granted a perpetual,
royalty-free license to license and distribute such
Intellectual Property in its products, and, except
with respect to such Intellectual Property related
to the Internet browser, to develop, license and
distribute modified or derivative versions of such
Intellectual Property, provided that the Operating
Systems Business does not grant rights to such
versions to the Applications Business. In the case
of such Intellectual Property that is related to
the Internet browser, the license shall not grant
the Operating Systems Business any right to
develop, license, or distribute modified or
derivative versions of the Internet browser.
iii. The transfer of ownership of the Separated
Business by means of a distribution of stock of the
Separated Business to Non-Covered Shareholders of
Microsoft, or by other disposition that does not
result in a Covered Shareholder owning stock in
both the Separated Business and the Remaining
Business.
d. Until Implementation of the Plan, Microsoft shall:
i. preserve, maintain, and operate the Operating
Systems Business and the Applications Business as
ongoing, economically viable businesses, with
management, sales, products, and operations of each
business held as separate, distinct and apart from
one another as they were on April 27, 2000, except
to provide the accounting, management, and
information services or other necessary support
functions provided by Microsoft prior to the entry
of this Final Judgment;
iii. take no action that undermines, frustrates,
interferes with, or makes more difficult the
divestiture required by this Final Judgment without
the prior approval of the Court; and iv. file a
report with the Court 90 days after entry of this
Final Judgment on the steps Microsoft has taken to
comply with the requirements of this section i.d.
2. Provisions Implementing Divestiture
a. After Implementation of the Plan, and throughout
the term of this Final Judgment, neither the
Operating Systems Business nor the Applications
Business, nor any member of their respective Boards
of Directors, shall acquire any securities or assets
of the other Business; no Covered Shareholder holding
securities of either the Operating Systems Business
or the Applications Business shall acquire any
securities or assets of or shall be an officer,
director, or employee of the other Business; and no
person who is an officer, director, or employee of
the Operating Systems Business or the Applications
Business shall be an officer, director, or employee
of the other Business.
b. After Implementation of the Plan and throughout
the term of this Final Judgment, the Operating
Systems Business and the Applications Business shall
be prohibited from:
i. merging or otherwise recombining, or entering
into any joint venture with one another;
ii. entering into any Agreement with one another
under which one of the Businesses develops, sells,
licenses for sale or distribution, or distributes
products or services (other than the technologies
referred to in the following sentence) developed,
sold, licensed, or distributed by the other
Business;
iii. providing to the other any APIs, Technical
Information, Communications Interfaces, or
technical information that is not simultaneously
published, disclosed, or made readily available to
ISVs, IHVs, and OEMs; and
iv. licensing, selling or otherwise providing to
the other Business any product or service on terms
more favorable than those available to any
similarly situated third party.
Section 2.b.ii shall not prohibit the Operating
Systems Business and the Applications Business from
licensing technologies (other than Middleware
Products) to each other for use in each others'
products or services provided that such technology
(i) is not and has not been separately sold,
licensed, or offered as a product, and (ii) is
licensed on terms that are otherwise consistent
with this Final Judgment.
c. Three months after Implementation of the Plan and
once every three months thereafter throughout the
term of this Final Judgment, the Operating Systems
Business and the Applications Business shall file
with the Plaintiffs a copy of each Agreement (and a
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