US Government
& States Favor
Microsoft Breakup

WASHINGTON (Reuters) - The U.S. government favors breaking up Microsoft Corp. to settle the firm's landmark antitrust case, people familiar with mediation talks taking place in Chicago said on Wednesday.
The sources said that details of the remedy remain unclear, but it had emerged that the Justice Department and the 19 states involved in the case favor breaking up the company.
The mediation talks began late last year under the supervision of Judge Richard Posner, chief of the United States Court of Appeals for the Seventh Circuit, who is acting in a private capacity.
U.S. District Court Judge Thomas Penfield Jackson -- who is trying the case in Washington -- asked Posner to step in to mediate in the case after earlier attempts failed. The settlement talks began after Jackson found in early November, 1999, that Microsoft used monopoly power to harm consumers, competitors and other companies.
USA Today reported earlier on Wednesday that the government favored a breakup of the company, giving specifics of the way the company would be restructured.
A Justice Department spokeswoman said the USA Today report was inaccurate, without elaborating. ``The story is inaccurate in several important respects,'' the spokeswoman said. ``It does not accurately represent our views.''
Others familiar with the case said USA Today was correct in saying the government favored breaking up the company but incorrect in the way it characterized how the government wants the company to be restructured.
Another Justice Department official said: ``The Justice Department will not discuss any aspect of the mediation process.''
A spokesman for Iowa Attorney General Tom Miller, who is leading the state's efforts in the case, said: ``We have not commented at all in this period where the judge has ordered mediation. We are not commenting.''
At a meeting in Jackson's chambers in Washington before the settlement talks began, Judge Jackson expressed concern about news reports that the states and the Justice Department were unable to agree.
People familiar with the talks in Chicago said there did not appear to be significant disagreement now between the states and the Justice Department in the negotiations.
A spokesman for Microsoft declined to comment on the mediation process.
``We're not going to speculate on what the government may or may not be thinking,'' said Microsoft spokesman Mark Murray. ''We think it's completely inappropriate and counterproductive for anyone to be discussing the confidential mediation process.''
Murray said: ``Without commenting on mediation, we think any talk of breaking up Microsoft is completely unwarranted. There's nothing in this case that would support such a step.''
At this point in the case, the two sides are arguing over whether Judge Jackson's findings of fact show that Microsoft broke the nation's antitrust laws.
The government has already submitted a brief arguing that the findings prove Microsoft did break the law. Microsoft replies on Jan. 18, with further filings by the two sides on Jan. 25 and Feb. 1.
Jackson will hear oral arguments on Feb. 22. If he does find Microsoft broke the law, then he will likely hold yet another phase of the trial to determine remedies.


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