U.S. ATTACKS MICROSOFT'S ALTERNATIVE.

In a week filled with proposals and counterproposals, the U.S. government, and its 17-state AG allies, have vigorously attacked Microsoft's defense against its proposed breakup as being a cosmetic exercise designed to ignore and paper over the real dangers of its monopoly position. The government's counterproposal has argued that Microsoft's solution would offer no significant changes to the competitive environment. The legal brief filed on behalf of the Department of Justice and the 17-state attorneys general argue that the Microsoft counterproposal did not address the most important violations found by the court, including the principal allegation that Microsoft had illegally linked its Web browser to the Windows operating system.

In its counterproposal Microsoft had placed significant emphasis on the need for "cross pollination" within the company as the mechanism whereby new products and services are efficiently and economically developed. The government in its counterproposal rejected these arguments and referenced numerous instances in which executives both in internal communications, and in communications with the public had indicated that daily cross fertilization of ideas among operating groups was not obvious.

Each side in this mid-stage of litigation is accusing the other of tortured readings and mischaracterizations of evidence.

Microsoft in its brief indicated that it would need six months to prepare for penalty hearings should the judge decide to consider the government's breakup plan. Ostensibly the reason for this timetable according to its adversary is that Microsoft hopes a change in administrations will favor its position, particularly if a Republican administration succeeds the Clinton administration. In opposing this timetable the Department of Justice and state allies argue that the penalty phase could be concluded quickly, and accused Microsoft of a transparent effort to delay the determination and implementation of a remedy as long as possible. Such an effort would hardly be surprising.

It appears likely that Microsoft's attorneys expect to convince the court that they need as long as six months to prepare their defense of a breakup plan.

Bill Gates is scheduled to be in Washington to testify before the Joint Economic Committee in early June, although he is expected to avoid any extensive discussion of the antitrust case.

Since the initiation of this lawsuit, Microsoft has dramatically expanded its lobbying efforts in Washington. It has even more recently hired high-powered lobbyists, including the well publicized high level member of the Bush campaign committee, to lobby its anti-breakup position. It is perhaps no coincidence that Bush himself has expressed antipathy for breaking up Microsoft.

A review of published reports concerning such lobbying efforts, as well as EDP's editorial conversations with parties involved indicates that Microsoft's lobbying efforts are bipartisan and increasingly intense.

According to Robert Bork, a former judge with the U.S. Court of Appeals, and a paid consultant for Microsoft's rival companies, Microsoft money and think tank scholars has reached an unprecedented level. According to Bork, the company's efforts are, of course, designed to reverse what is happening in the courts. However, in fairness, Microsoft's rivals are doing the same in their own efforts to promote the breakup of the giant company.