COURT NOTES: On June 7, 56 years and 1 day after the D-Day invasion that led to the defeat of Nazi Germany in World War II, Judge Thomas Penfield Jackson handed down a decision almost as momentous, something that could eventually liberate the world from Microsoft. After more than two and a half years of legal maneuvering, Jackson issued a final ruling in the antitrust case: break Microsoft company apart. The judge's remedy is almost identical to the one proposed by the Department of Justice, splitting the company into two units with heavy restrictions on the behavior of both.
One company will retain the rights to Microsoft's operating system products - Windows 2000, 98, CE, and others under development - while the second group will hold on to everything else, including Office, MSN, Internet Explorer, and MediaPlayer. Both companies will be placed under heavy restrictions on their behavior, such as limiting contact with one another for 10 years, forcing them to publicize APIs and other software calls, and forcing the companies to have equal relationships with every OEM partner. Microsoft has four months to come up with the breakup plan and another 12 months to implement it if the judge approves. Controls on the company's business practices will be enacted 90 days after the ruling, unless Microsoft can get an appeals court to go against Jackson's decision before then.
During the week leading up to Jackson's monumental ruling, Microsoft had tried several times to have some of the "unjustified" government proposals tossed out, but the judge rejected every attempt. The DoJ did cave in to a few of the defendant's requests, but as Microsoft's own attorney said, they were "cosmetic changes" such as referring to the breakup as a 'divestiture' instead of a reorganization. Overall, the government only accepted 18 of 103 proposed changes.
Microsoft also filed a few documents designed to helps its inevitable appeal of the ruling [see below], since the company's attorneys have already given up on making any progress with Judge Jackson. Those filings addressed the judge's rejection of a last-minute attempt to add more witnesses to the trial [see NewsSource, May 29], a decision that could very well turn the appeals court towards Microsoft.

Judge Jackson's entire Final Judgment can be viewed online in either PDF or HTML format.

MORE COURT NOTES: Now that the main case has been completed, Microsoft's only option is an appeal. Microsoft hopes to get its case to the U.S. Court of Appeals, since that panel of judges has ruled in the company's favor several times in recent history. If that body ruled in Microsoft's favor, the government would certainly appeal it to the Supreme Court, a setting that would be more sympathetic to the Department of Justice case. So the government would prefer that it go directly to that court, possibly saving several years of pointless litigation.
Microsoft immediately asked Jackson to hold off on implementing the behavioral remedies, and since he was expected to deny the motion, they filed the same petition with the appeals court a day later. The appellate court accepted the petition, and announced that it would hear the proposed stay AND parts of the antitrust case in front of its entire panel of 11 judges. But the government asked Jackson to withhold a ruling on the stay until Microsoft filed its entire appeal, since that is required before they can expedite the entire thing to the Supreme Court.
Jackson finally stepped in like a teacher between two fighting schoolchildren and made a compromise attractive to both sides. Microsoft will now appeal its case directly to the supreme court, and in exchange Jackson will wait until after the appeal process to implement any behavioral restrictions. That frees Microsoft from penalties until after the case has been heard, and speeds up the schedule by as much as 18 months. With both sides agreeing to file necessary paperwork months earlier than required, this case could be in the nation's highest court as soon as September. But if the court chooses not to hear the case (as it very well could do), the trial could stay at a standstill for years.

In their usual manner, Microsoft is fixing a product's slowing sales by changing the way it is marketed and sold instead of attacking performance problems. This time, the products being fiddled with belong to the BackOffice line of server software. According to a company spokesman, individual servers like Exchange will no longer be identified as being part of the 'BackOffice Family' as they are now. Instead, the BackOffice moniker will be reserved only for the suite itself, which is designed for small to medium size businesses. Microsoft also announced a new 'per-processor' licensing plan, charging server customers for the number of processors used to run the software instead of by the number of individual users - a figure that was hard to calculate for public Internet sites with thousands of visitors. IBM and Oracle both introduced similar plans earlier this year, hurting sales of Microsoft products still using the older more complicated pricing scheme.

According to several sources, Windows ME was released to manufacturers sometime during the week of June 12. Considering the amount of time it usually takes after a system is released, we should see the first preloaded Windows Millennium Edition machines before the third week in July. Boxed retail versions will begin popping up shortly thereafter, at a cost comparable to Windows 98. Unfortunately for Windows 98 users, the upgrade will still be $90 even if ME is little more than an Internet Explorer upgrade and added home network functionality. But, you know what they say about fools and their money...

On June 15, Microsoft showed off elements of Office 2001, a Macintosh-only software suite scheduled for release later this year. With AppleWorks bundled with every iMac and iBook sold, Microsoft's suite has really taken a sales beating over the last year - a problem the company hopes to resolve with some of the AppleWorks-inspired changes in Office 2001. Those features include a reduction of useless features, streamlined design, a 'Project Gallery' similar to the AppleWorks start screen, and integration with QuickTime. Office 2001 will additionally replace Outlook with 'Alpaca', a new integrated e-mail and contact management utility - something Apple cannot include in its own software suite because of an agreement made with Microsoft when it bought 7 percent of Apple in 1997.

Combining several services and deals into one package, Microsoft, Hughes Electronics' DirecTV, and Thomson have joined together to offer UltimateTV, a service combining Internet, satellite and VCR functions into one device. The hardware will be manufactured by Thomson, television service will be made available from DirecTV, and Internet access will be provided by MSN - with a separate charge for each. Making things confusing, Microsoft will continue to market WebTV and WebTV Plus along with UltimateTV and a half dozen other interactive services from various partners. UltimateTV and WebTV will also face competition from AOLTV, a similar service recently launched by America Online.

On May 30, U.S. District Judge Ronald Whyte tossed out one of Sun's claims against Microsoft in the lawsuit over Java. This part of the case, which was probably the easiest to prove, said Microsoft violated its contract with Sun by releasing some actual Java source code on the Internet for free. The Judge said all three leakages were "inadvertent" and that Sun had failed to show if anyone inside the company that would have done it deliberately. He then scheduled a hearing on August 11 to set the date for the actual trial, assuming Sun has anything left to show him by then.

At 5:00 AM on Friday June 2, a small bomb exploded outside Microsoft's office in Johannesburg South Africa. According to the local police, the device was apparently located outside of the building in a small courtyard next to the cafeteria. The only reported damage was sustained by a few tables and some shattered windows (the glass kind, not the software). Johannesburg officials say they have yet to discover any motives, but who hasn't at one time or another wanted to toss a few bombs at Microsoft after reinstalling Windows a dozen times in a week?

Microsoft released Windows CE 3.0 on June 15, adding little to the system except a smaller pricetag. According to a press release, Wince 3 supports more multimedia and a wider assortment of languages, and is also componetized to be broken into small parts - just like Linux and the forthcoming Windows 2001/Whister system. The company also reduced the price by as much as 50 percent.
Microsoft's CarPoint subsidiary has announced it will be purchasing a competing automotive sales site, DriveOff.com. While specific details of the deal were not released, we do know that the Navidec-owned site will be integrated with MSN CarPoint and will no longer exist as a separate company.
On June 12, Microsoft bought roughly $53.2 million in United Pan-Europe Communications stock, using warrants issued as part of a business deal last year. Under the warrants, Microsoft obtained each share of the company for less than $10, while its market value was worth nearly three times that amount. The investment raises Microsoft's stake in the telecom to around eight percent.
As the ship sank a little lower, Microsoft in early June announced yet another executive departure. This time vice president of developer marketing Tod Nielsen is cashing in his chips, apparently so he can start his own business. A company spokesman said they would not be naming a direct replacement for the 12-year veteran.

Retracing the Missteps in Microsoft's Defense
In the end, credibility crumbled
MS to relocate to escape Feds
Hotmail Clients Getting Steamed
Who's Digging Up MS Dirt?