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April 24th, 2000

[6:30 AM] Reports Leak: DOJ TO Seek Breakup Of Microsoft, MS Stock Tanks In Pre-Market Trading
by Bryan Chaffin

CNBC is reporting that the government, through the DOJ, will be suggesting a breakup for Microsoft to remedy their Monopolistic business practices. According to CNBC, it will be proposed that the company be split into three separate companies: An OS company, an applications company, and an Internet Services company.

It is also being suggested that Microsoft divest itself of Microsoft Office in order to spur competition in the productivity market. The Wall Street Journal is reporting that Judge Penfield Jackson has asked for remedy proposals to be submitted by this Friday. Judge Jackson has gone on record as wanting to see this case sent on the fast track to the Supreme Court , a move Microsoft has resisted.

Earlier this year, Microsoft was found to have Monopoly power and to have exploited that power in an illegal fashion by Judge Jackson.

Microsoft's stock tanked in pre-market trading, trading as low as 71, down 7 15/16 at press time. CNBC is also reporting that one analyst has removed Microsoft from their recommended list, a stunning move.

The Mac Observer Spin: This is very interesting. As of last week, the DOJ was not going to be seeking the break up of Microsoft, and was instead pursuing behavior modification as a solution. While the leaks have been pouring out throughout the morning, it has not been indicated why the sudden shift towards a break up. This is pure speculation, but it is possible that the DOJ is playing hard ball with Microsoft which has sought to delay any rulings on the chance that a Republican win during elections later this year could install a more pro-Microsoft element in the DOJ. The Bush campaign has gone on record in support of Microsoft (major waffling aside) and simultaneously demonstrated a complete lack of understanding of the facts and the computer industry.

The Mac Observer has not yet taken a direct stance on the breakup issue as we have been torn between a desire to let the market deal the Microsoft problem and the reality that Microsoft does not compete on the basis of the merits of their products. Instead, the company has consistently competed by leveraging the strength of Windows against other companies. That said, their Mac Business Unit makes good products in our opinion. Some have weighed into this debate with suggestions that Microsoft be prohibited from a number of different business avenues, a choice that we find deplorable. It is likely that it will require a breakup that spreads the company's assets among two or three companies to keep Gates and Company from leveraging them to spread their influence.

Once thing we are not against, and that is success that has been earned in the marketplace. It's too bad that Microsoft has not actually earned most of their success (with some exceptions). And, just to make it clear, hooray for Microsoft's Mac Business Unit and all the Mac developers working there.

Microsoft



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