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Justice, States Reportedly Pushing for Microsoft Breakup

Carolyn Koo

A possible breakup of Microsoft (MSFT Quote) could be in the works, as the U.S. Justice Department and 19 states are said to be seeking a divestiture of the company's Office software business, in addition to other splits along product lines.

Federal officials reportedly see divestiture as the least "regulatory" way of controlling Microsoft's monopoly, The Wall Street Journal said Monday. Divestiture of the Redmond, Wash.-based company's software applications would substantially restructure the world's largest software maker, though it would still fall short of some of the breakup proposals.

Three weeks ago, a federal judge ruled that Microsoft had violated U.S. antitrust laws, illegally tying products together and unfairly expanding its monopoly to drive software competitors out of business.

Microsoft said it plans to appeal the judge's ruling. However, the company said an appeal could only be filed after U.S. District Judge Thomas Penfield Jackson decides on legal remedies to take against the software giant.

The Office software unit is part of the company's applications unit, which alone provides more than 40% of total revenue.

Shares of Microsoft were down 10%, or 7 15/16, in pre-market activity, according to Instinet. (Microsoft closed Monday trading down 12 5/16, or 16%, at 66 5/8.)