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Software group favors Microsoft breakup

Breaking up is hard to do, but it's the best remedy if the company loses the antitrust suit, argues the Software and Information Industry Association.

A software trade group would favor breaking up Microsoft, if the company loses its landmark antitrust case, because the remedy would involve less governmental oversight in the long term, according to a report submitted to the Justice Department in February.

The Software and Information Industry Association said in the 57-page report that it takes no official stance on what remedies ought to be imposed on Microsoft if it loses. But the group, which represents 1,400 software and content companies, made clear it would prefer "structural" remedies in which Microsoft is broken up over court-ordered prohibitions on specific business conduct.

"SIIA concludes that a structural reorganization of Microsoft can avoid the drawbacks associated with conduct-based, behavioral relief, preventing future anticompetitive leveraging, and creating a self-executing remedy that avoids unnecessary dislocations to Microsoft's shareholders and equity markets," the report contends.

Microsoft spokesman Tom Pilla called the suggestion "old news," and out of touch with the majority of companies in the computer industry.

"The discussion of remedies is premature and frankly a PR stunt designed to divert attention away from the real issues in this case," said Pilla. "If you look at other industry organizations you'll find that there's almost no support for these remedies."

Pilla pointed to a survey by the pro-Microsoft Association for Competitive Technology that found that a majority of computer executives, including many members of SIIA did not approve of breaking up Microsoft.

The SIIA report, whose existence was first reported last month, also suggests that the court consider other remedies. They include:
•  requiring Microsoft to disclose the source code to its Windows operating software,
•  compelling Microsoft to license Windows to anyone,
•  prohibiting Microsoft from charging customers differently for Windows, and
•  banning the bundling of Windows and the Internet Explorer browser.

But the SIIA, which was formed when the Software Publishers Association recently merged with the Information Industry Association, is leaning toward structural remedies, arguing that they "effectively cure--once and for all--the competitive crisis plaguing the software industry." The Software Publishers Association has long been a supporter of the government's antitrust case against Microsoft.

"The most significant advantage of a structural remedy is the significant reduction in the amount of ongoing government involvement necessary to restore competition to the marketplace." The report is more ambivalent about how Microsoft should be broken up.

Under one proposal, Microsoft would be divided "horizontally" so that its operating system, applications, and Internet content divisions are separated into separate companies. Under a separate proposal, however, Microsoft would be broken up "vertically," into two or more companies.