COURT NOTES: In their scheduled rebuttal to Microsoft's proposed antitrust remedy, attorneys representing the government again submitted reasons why the company should be split in two. According to that filing, Microsoft's remedy proposal [see NewsSource, May 15] didn't go nearly far enough, and would do nothing to "undo the damage to competition caused by its past illegal conduct." The 70-page document also called Microsoft's plan to reschedule the proposal hearing "a transparent effort to delay the .. implementation of a remedy for its illegal acts as long as possible."
To keep the government from getting the last word before meeting in front of the judge, Microsoft filed a response to that rebuttal the following week. In their response, Microsoft again attacked the motives behind the entire case, accusing the government of picking a punishment that would benefit Microsoft's competitors while harming consumers. They cited internal Department of Justice documents from 1994 and 1995 that questioned the value of a split back before Microsoft was nearly as large as it is now. The response document also asked the judge once again to throw out the entire case, or at least disregard the suggested breakup proposals.
During the first remedy hearing on May 24, Microsoft presented Judge Jackson with an 'offer of proof' document that called for another dozen witnesses, including Bill Gates and Steve Ballmer, to come before the court. Jackson immediately told Microsoft's attorneys that he would not consider any more witnesses since the trial had gone on long enough already. He then curtly shot down their protests and demands for more time.
But Jackson also attacked the government's two-way breakup plan, questioning the automatic creation of competition if Microsoft was made into two units. He then asked lead government attorney David Boies why his team had rejected a similar plan creating three Microsofts with identical product lines. Boies explained splitting the company in two would be simpler than into three - to which Jackson replied that even the proposed spilt would be fairly complex. The judge then mentioned a plan proposed by two industry tradegroups that would split Microsoft into three different units. He asked Boies to consider a split of that nature in a 'clean copy' of the proposal that made several changes proposed during the day's session. The Judge set a May 26 deadline for the submission of that document, and then gave Microsoft 48 hours to respond to it.
But when that date came, the government's clean copy of the filing was barely changed from the original proposal. The plan retained a two-way split, along with most of the behavioral changes. The government did loosen a few restrictions, like raising the limit on individuals who can own stock in both companies from three percent to five (basically targeting Bill Gates and Steve Ballmer, since no one else owns more than four percent). The refiling also clarifies restrictions on licensing deals between the separated companies. Microsoft now has until May 29 to answer the refiled penalty proposal, after which Judge Jackson is expected to rule in favor of the government.

On May 22, Microsoft provided two updates for Outlook designed to stop VBScript worms like Melissa and the recent 'I Love You' virus [see NewsSource, May 15]. The first of the two adjustments blocks executable code from being sent or received in e-mail attachments. The second causes a warning dialogue box to come up when any code or script that escapes the first patch tries to use the e-mail address book. Those fixes came just in time, as I Love You has spawned at least a dozen imitators, from damaging fake resume messages to a harmless script that simply ads a pornographic link to the desktop. But in typical Microsoft style, the updates cannot be uninstalled and they reportedly disable Outlook's synchronization with handheld PDAs. That aside, the patches and millions of dollars in lost productivity could have been saved if Microsoft had simply made Outlook safer to begin with.

And just as that insecure feature was being corrected, the security firm @Stake Lopht found another severe problem with Microsoft Office: the 'Office Assistant' feature that provide users with irritating cartoon help wizards has a hole allowing dangerous scripts to be run from an outside computer. Microsoft released a patch within hours of @Stake's notification, but again a lot of time and trouble could have been saved if Microsoft had simply made the program more secure to begin with.

Less than two weeks after Nathan Myhrvold said that he has no intention of returning to Microsoft full-time [see NewsSource, May 15], Jim Allchin announced that he too would be taking an "extended vacation." Allchin, who not long ago was given shared control of Microsoft's newly-formed Platform Products Group, is widely known for his positions of leadership over the Windows 2000 and Internet Explorer development teams. While everyone publicly says he will return to the company, there are questions if he really will, considering that he has no financial incentives to return and was extremely embarrassed over testimony in the antitrust trial last year. Until Allchin returns - if ever - his position will be held by Paul Maritz, an executive who recently struggled with Allchin over Windows development plans. With high profile executives leaving the company faster than it can hire replacements, Microsoft might eventually have to give Bill Gates every managerial position in the company. Just like Captain Smith of Titanic fame, Captain Gates may too go down behind the wheel of a massive sinking ship.

Microsoft's long-promised 'Next Generation Windows Services' is supposedly the foundation for a raft of world-changing technologies that seamlessly integrate the Internet with the computer desktop and other devices. One of NGWS' key components is Mars, the code name for a new MSN interface. But so far the future looks very much like the past - a beta of Mars released on May 24 is little more than a candy-coated Internet Explorer shell with MSN buttons. Microsoft is playing up those Asupposed improvements as an easier way to access the Web, but we have some serious doubts about their promises to outdo AOL, the king of Internet simplicity. Microsoft was scheduled to deliver more information about the NGWS strategy on June 1, but due to conflicts with the expected court decision that event was pushed back into at least July. By that time the company should have a little more to show than just some new awkward acronyms and shiny navigation buttons.

Since development of Windows 2000 was originally mapped out years ago, Microsoft has promised a high-end 'Unix-killer' version of the operating system capable of handling extremely heavy loads. When the Professional, Server, and Advanced Server flavors of Windows 2000 finally shipped in February of this year Microsoft was still promising to deliver that product, only a few months late to "work out a few bugs." The ship date Microsoft whispered around the IT industry was June 2000 - a period of time we have now nearly reached. But Microsoft, true to its usual fashion, is starting to back away from those original promises and has apparently delayed Windows 2000 DataCenter Server by many more months, possibly until the end of the year when 64-bit chips will be available for the system to take advantage of. The company's earnings may start to suffer if the delivery slips much more than it already has, since long-promised new versions of SQL Server, Exchange, and other products depend upon its availability for their own release.

As millions of new computers are manufactured ever year, old computers containing toxic materials like lead and mercury are dumped into landfills around the world. To fight that growing problem, the Idaho Youth Ranch charity has started a program to refurbish the used machines and sell them cheaply to underprivileged children. Unfortunately, the Boise-based group is now being forced to buy software for the machines because Microsoft has threatened it with $20,000 in fines if the old operating systems are not first deleted. The expense of buying new copies of Windows for each old PC adds nearly $100 to their base price - making them too expensive for many needy families. A Microsoft spokesman defended the company's position by blaming computer systems' original owners for not also donating the original software and disks along with their machines.

During the Government Technology West conference in Sacramento on May 15, Microsoft announced a partnership with the Carta company to build, market, and distribute software designed specifically for governmental use. (Details of the agreement were not released.) Ironically, future government action against the company may be conducted with its own products.
Stock in eGreetings soared by over 80 percent May 19, following an announcement that the company's online greeting card service would be integrated into MSN. Microsoft had previously tried to market its own electronic greeting cards, but abandoned that project after losing a high-profile lawsuit over e-mail filter tools that blocked competing card services [see NewsSource, Dec 14 '98].
When IE 5 for the Macintosh was released last month, the product was applauded as one of the best Mac applications in history. But the team behind it wasn't allowed to celebrate long, since Microsoft has now decided to 'reward' their hard work by assigning them to work on a Web browser for the lame duck WebTV platform. So who does that leave inside Microsoft to develop for the Macintosh? Nobody, if our sources are correct.

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