Microsoft May Challenge Evidence

by Michael J. Martinez, AP Business Writer
May 4, 2000, 11:03 am GMT

REDMOND, Wash. (AP) - Microsoft Corp. (NasdaqNM:MSFT - news) may ask a federal judge to throw out the Justice Department's plan to break up the company, arguing that the government improperly based its proposal on evidence that wasn't presented at trial, according to people close to the antitrust case.

Microsoft objects to the statements of five outside experts in the plan submitted to U.S. District Judge Thomas Penfield Jackson of Washington, D.C., by the Justice Department and 17 states, according to the sources, who spoke on condition of anonymity.

The software company contends those experts addressed issues that were not brought up in the nearly year-long trial.

On April 3, Jackson ruled that Microsoft violated state and federal antitrust laws used its monopoly power in personal computer operating systems to crush rivals. The government then asked the judge to break Microsoft into two rival companies.

Microsoft must respond by May 10, and the sources said the filing is still being drafted. The company has already said it will then ask for substantial delays in the proceedings before hearings are held. Jackson's plans call for hearings on May 24.

The company believes the government tried to introduce new evidence in its filing, such as the claim that Microsoft attempted to sabotage Palm Computing's popular organizers by making changes to the way they interact with the Windows operating system, the sources told The Associated Press.

They said the company believes there is enough new information in the government's proposed penalty to justify granting Microsoft an extension in the proceedings to subpoena government documents that show how the Justice Department arrived at its recommendation.

Some outside experts say Microsoft would be raising a valid argument.

``If Judge Jackson goes beyond the record of the trial, he has to have a very good reason for doing it,'' said William Kovacic, an antitrust expert at the George Washington University School of Law.

Kovacic added that if Jackson does not honor Microsoft's request to toss the government's remedy entirely, he would have to allow Microsoft to have an equal chance at rebutting the new claims, possibly including a cross-examination of the government's experts and providing expert testimony of its own.