Microsoft files final briefs in antitrust case

SEATTLE - Microsoft Corp., filing a last brief before the judge weighing its fate, offered top executives from Compaq, DreamWorks and other companies Wednesday as potential witnesses against the government's proposal to break it into two companies.

Microsoft also submitted its suggested changes to the breakup plan. They would allow Microsoft more time before a possible breakup and would keep one of the two new companies away from the watchful eye of the Justice Department.

In an additional ''offer of proof,'' Microsoft's lawyers said Jeffrey Katzenberg of DreamWorks and Michael Capellas of Compaq, among others, would testify to the negative effects that a Microsoft breakup would have on their companies and industries.

Microsoft filed the brief with the court of U.S. District Judge Thomas Penfield Jackson, who ruled April 3 that Microsoft had engaged in anti-competitive marketing practices in violation of antitrust laws.

As a penalty, Justice and 17 states said they wanted to split Microsoft into two parts - one which would develop and market the various Windows operating systems, and the other, which would take possession of Microsoft Office and the company's various Internet properties.

Since Jackson had already closed hearings on the case, no more witnesses could be called. Therefore, the company's offer Wednesday amounted to little more than a symbolic move aimed at showing the court supporting testimony that it believes the judge should have heard.

The department issued a statement late Wednesday calling the company's filing ''another effort to posture for appeal.''

''Much of Microsoft's submission is patently irrelevant to the question before the court,'' it said. ''The filing does not come to grips with the fact that Microsoft has been found to have repeatedly engaged in serious legal violations, and serious remedies are required to restore competition and prevent similar violations in the future.''

The company also filed a number of proposed changes to the government's breakup plan. Most notably, Microsoft's line-by-line editing and changes would include very little government oversight over the new company governing Microsoft Office. It also would not require the company to store and keep its internal e-mails, which were used to great effect by the government during the 78-day antitrust trial.

Microsoft also said that it wants a full year to develop the details of any such breakup; the government plan would give the company only four months. The company further defined various aspects of the breakup plan, and in every instance, replaced the word ''reorganization'' with ''divestiture'' in describing it.

''We are offering these edits with the obvious caveat that we do not believe that such an extreme and damaging remedy would be sustained by the appellate process,'' Microsoft spokesman Jim Cullinan said. ''Still, we may have to live with this in some form or another, and we want it to be clear as possible.''

Now that Jackson has Microsoft's response in hand, he could make his final decision at any time.

''The real test now comes in whether he simply signs off on what the government gave him or whether he takes into account Microsoft's brief,'' said William Kovacic, an antitrust expert at the George Washington University School of Law. ''Microsoft's lawyers really did an excellent job with their proposed changes. The judge may not want to ignore that entirely.''

According to Kovacic, Jackson may simply want to embrace the government plan in order to quickly get the case to an appeals court - something the judge has said he is eager to do.

Jackson only last week refused to allow Microsoft additional time to debate the remedy phase of the case. So the company submitted so-called ''offers of proof'' to say what it would have done.

Although such filings are unlikely to sway Jackson, they might be important in Microsoft's planned appeal of his ruling that the software giant is a monopoly that violates antitrust laws.

Microsoft's latest brief offered testimony from several potential witnesses, including the chairman of insurance giant Geico and the CEO of clothing store chain Nordstrom Inc. Its first offer of proof, hastily filed as Jackson gaveled last week's hearing to a close, included Microsoft Chairman and co-founder Bill Gates, Chief Executive Officer Steve Ballmer and other company executives, along with economists and other experts.

The government, in a revised brief filed at the court's behest Friday, said the last-minute offers of testimony from Gates and others was an 11th-hour ploy. Microsoft says it acted properly, given that the judge would not allow any more testimony or discovery in the case.

Microsoft also had asked the judge for as long as six months to gather evidence and depose witnesses who would dispute the government's assertion that a breakup was the best way to reverse the damage done by the behavior Jackson found anticompetitive.

With Jackson apparently poised to issue his final order, the company postponed an event, scheduled for Thursday, to publicly launch its Next Generation Windows Services, a multibillion-dollar effort to make Microsoft software and data available through the Internet to any kind of computing device, including cell phones and handheld organizers.

However, Microsoft managers around the world were to receive a briefing on Next Generation Windows Services. But the event for reporters and financial analysts was postponed to June 22.