(April 25) – “Top Justice Department antitrust officials plan to brief the White House Tuesday on their proposal to divide Microsoft Corp. into different parts as a way to foster competition in the high-technology industry,” write Bob Davis and Ted Bridis in today’s Wall Street Journal.
“A White House spokesman described the briefing as ‘informational’ only and said he didn’t expect administration officials would try to reshape the proposed remedy. Nevertheless, the development represents the first time the White House has been directly involved in the Microsoft litigation since White House analysts last year reviewed the case’s economic significance. The White House has taken a hands-off stance because it was generally convinced that the Justice Department was acting in an economically responsible fashion and because the White House didn’t want to be accused of interfering politically.
“Antitrust chief Joel Klein will lead the briefing, which will include Treasury Secretary Lawrence Summers, National Economic Council Director Gene Sperling and Chairman of the Council of Economic Advisers Martin Baily, along with White House lawyers. Neither President Clinton nor Vice President Al Gore will take part in the meeting. Mr. Gore, in particular, has kept his distance from the case, which divides his supporters in the high-technology industry.
“The White House hasn’t determined whether it should undertake another review of the economic consequences in light of the latest proposal. A second review is unlikely because the Justice Department and states must file their recommendations on Friday with the judge overseeing the case.
“The federal proposal would carve the software concern into two companies, one that sells Microsoft’s dominant Windows operating system and another that sells its widely used Office software. A stand-alone Office company would be inclined to create versions of its products for computers that aren’t using Windows, officials believe. That would eliminate a central hurdle—known in antitrust circles as the “applications barrier to entry”—to the success of fledgling operating systems, such as Linux, or BeOS from Be Inc., federal officials believe. Microsoft blasted the proposal Monday.
“State attorneys general from the 19 states involved in the case debated the merits of the plan for the first time in a conference call Monday, participants said. The proposal marks a shift by Mr. Klein, the antitrust chief, who during earlier settlement talks didn’t push aggressively for sanctions that included a breakup.
“Mr. Klein first notified states about the remedy proposal in a conference call after financial markets closed Thursday for the holiday weekend, then faxed supporting paperwork Friday. Some states previously discussed similar sanctions.”