IT IS the biggest antitrust ruling since the
            break-up of AT&T in 1983. On June 7th,
            Judge Thomas Penfield Jackson ordered that
            Microsoft should be split into two
            companies. Those who think that this is too
            harsh a remedy should have seen the
            arrogant television interview given by Bill
            Gates immediately afterwards. Once again,
            Mr Gates roundly denied that Microsoft was
            guilty of any wrongdoing, despite the judge’s
            finding that it had repeatedly and
            systematically violated antitrust law. He
            also claimed that only a unitary Microsoft
            could introduce the tightly integrated
            products and services that customers
            actually want.

            In a memorandum published with his
            judgment, Judge Jackson explained that he
            had “reluctantly come to the conclusion that
            a structural remedy had become imperative:
            Microsoft as it is presently organised and
            led is unwilling to accept the notion that it
            broke the law or accede to an order
            amending its conduct.” He also noted that the
            software firm had done nothing to modify its
            illegal business practices “in any significant
            respect.” And he suggested that it might try
            in other markets the tactics it had used to
            corner the operating-system and browser
            markets. To underline the need for a
            structural remedy, the judge also condemned
            Microsoft for having “proved untrustworthy
            in the past”, calling the company’s purported
            compliance with past injunctions “illusory”
            and “disingenuous”.

            As well as giving the government the
            structural remedy it has called for—dividing
            the firm into an operating-system (Windows)
            company and an applications (Office and
            Internet Explorer) company—the judge
            imposed a range of tough restrictions on
            Microsoft’s behaviour that will take effect
            within 90 days. These measures are meant to
            release the rest of the computer industry
            from what some see as Microsoft’s reign of
            terror.

            The list of conduct-remedies that Judge
            Jackson has imposed is long. Microsoft has
            been ordered to cease discriminating against
            PC makers that support rival products; to
            license Windows on non-discriminatory
            terms; to allow PC makers to modify
            Windows, particularly its “desktop” default
            screen; to stop making a Windows licence
            conditional on taking other Microsoft
            products; to provide cheaper alternative
            versions of Windows if customers want
            them; and to continue licensing and
            supporting for three years predecessor
            versions of Windows at the pre-release
            price of new versions.

            On top of all this, Microsoft has been
            instructed to disclose Windows application
            programming interfaces “in a timely
            manner”; to stop all exclusionary deals
            designed to restrict competition; to stop
            punishing firms that offer competing
            products; and to desist from action “that it
            knows will interfere or degrade the
            performance” of rival software firms’
            programs.

            The actual break-up of the company will be
            stayed pending an appeal. But antitrust
            experts think that Microsoft will find it hard
            to delay the implementation of these
            conduct-remedies. Some may be taken to
            infringe the company’s intellectual-property
            rights, but most are, in reality, little more
            than the standard of behaviour that might be
            demanded of any highly dominant company.
            These restraints are thus unlikely to be
            significantly curtailed until the appeals
            process has run its full course.

            How the appeals process itself will proceed
            is still uncertain. Both Judge Jackson and the
            government would like to see the case put on
            a fast track to the Supreme Court, which
            could result in everything being dealt with
            inside a year. But the Supreme Court may
            insist on a thorough examination by the
            District of Columbia Court of Appeal first,
            which would add another year to the case.

            Microsoft continues to have high hopes of
            the DC appeal court, which has in the past
            sided with it, and against Judge Jackson, on
            the contentious issue of “tying”. But even the
            most sympathetic panel that the court’s
            computer throws up will not find it easy to
            dismiss Judge Jackson’s conclusion that
            Microsoft is an abusive monopolist that must
            be curbed, even if the court balks at the
            forced break-up.

            Microsoft also hopes that a victory for
            George W. Bush in November could help its
            cause. The governor of Texas appears to
            think that antitrust action is warranted only
            when there is clear evidence of price-fixing,
            which is not an issue in the Microsoft case.
            However, even though a Bush victory would
            see a changing of the guard at the Department
            of Justice, the 17 state attorneys who are
            co-plaintiffs will not be going anywhere.
            While the legal wheels still have much
            grinding to do, nobody, least of all Bill
            Gates, should underestimate the significance
            of this week’s judgment.