Updated from 2:47 p.m. EDT
Two days before a federal judge was scheduled to hear final oral arguments in the remedies phase of the
antitrust trial, the software company unexpectedly filed new documents Monday, bolstering its protestations against breaking up the company.
Drawing heavily on the government's own words and quoting court papers that date back five years to a previous case against it, Microsoft presented new arguments attacking a
breakup proposal from the
Department of Justice
and 17 state attorneys general.
Reiterating a request to dismiss the breakup proposal, Microsoft argued that the government had acknowledged that a breakup of the company would be "dangerous to the economy's welfare" and "against the public interest."
The Redmond, Wash.-based company also said the government had conceded that a causal connection between the conduct and the maintenance of monopoly power must be proved before "more extensive equitable relief" may be ordered.
And it asserted that the government did not dispute that no court had ever ordered the breakup of a company in a contested case, and that the government acknowledged that the core issue in this case involved "unsettled law."
Jim Cullinan, a Microsoft spokesman, said the company wanted to place additional comments in the record before Wednesday's hearing because of the "strong rhetorical" nature of the government's rebuttal to the company's proposal.
For its part, the Justice Department said that the latest Microsoft documents relied on statements the Government had made before the company engaged numerous violations of the law and that the fact that the company had repeatedly violated the law since 1995 demonstrated the need for a breakup.
remedies, which it was required to file May 10, also asked for a dismissal of the Justice Department's proposal. But they also asked for behavioral regulations, including restrictions governing the company's license agreements with computer makers. The restrictions would prohibit Microsoft from withholding license agreements from companies that ship or promote operating systems other than its ubiquitous Windows system. The restrictions would also require Microsoft to allow computer makers to ship versions of Windows that do not include Internet Explorer, the company's Web browser, as a default browser.
The new documents focus on refuting the breakup plan.
Investors showed little reaction to Microsoft's latest response to the government's breakup plan. The company's shares, which had traded at a 52-week low earlier on Monday at 62 7/16, closed down 7/8, or 1%, to 64 3/16.
The Justice Department and 17 attorneys general proposed last month to split the company into two parts. One company would own the operating system business while the other would own the remainder of Microsoft's assets, including the Office software package, Web browser and the MSN network of Web sites.
The government proposal also offers conduct remedies, including some that appear in the company's proposal. Two states abstained from the government proposal because they oppose the breakup.
Jackson's conclusions of law in the case,
issued April 3, found that the company was discriminatory in granting access to parts of the Windows code called applications programming interfaces, which software designers need to make their programs work with Windows.
He also ruled that the company broke antitrust laws by tying Internet Explorer to Windows. Microsoft contended that the browser is an integral part of Windows, not an unlawfully tied application.
Jackson also found that the company maintained its Windows monopoly by setting deals with computer makers to promote Microsoft products over those from rival software makers. Computer makers were also kept from altering the desktop, the screen that appears when no programs are running and features the icons of various programs, Jackson ruled.