Judge Jackson Issues Final Judgment in Microsoft Case

(June 7, 2000) Judge Thomas Jackson issued his Final Judgment in the government's antitrust action against Microsoft on June 7. He imposed the structural remedy that Microsoft be split into two companies -- one for operating systems, and one for applications. He also imposed a lengthy list of behavioral restrictions upon Microsoft.

On Wednesday, June 7, Judge Jackson released a Memorandum and Order, in which he addressed procedures leading up to this point, and a lengthy Final Judgment, in which he specified the remedies which he is imposing against Microsoft.

Judge Jackson also used his Memorandum and Order to criticize Microsoft. He wrote that "Microsoft, convinced of its innocence, continues to do business as it has in the past, and may yet do to other markets what it has already done in the PC operating system and browser markets."

He continued that "Microsoft has proved untrustworthy in the past. In earlier proceedings in which a preliminary injunction was entered, Microsoft's purported compliance with that injunction while it was on appeal was illusory and its explanation disingenuous."

In that appeal proceeding, the Court of Appeals issued an Opinion that reversed Judge Jackson.

The Final Judgment requires that "Not later than four months after entry of this Final Judgment, Microsoft shall submit to the Court and the Plaintiffs a proposed plan of divestiture." That plan must split Microsoft into two companies; it must provide for the "separation of the Operating Systems Business from the Applications Business".

The Final Judgment also covers assignment of intellectual property rights, stock ownership in the two companies, and restrictions on overlap of officers, directors and employees.

The Final Judgment provides that "neither the Operating Systems Business nor the Applications Business, nor any member of their respective Boards of Directors, shall acquire any securities or assets of the other Business; no Covered Shareholder holding securities of either the Operating Systems Business or the Applications Business shall acquire any securities or assets of or shall be an officer, director, or employee of the other Business; and no person who is an officer, director, or employee of the Operating Systems Business or the Applications Business shall be an officer, director, or employee of the other Business."

However, the bulk of the Final Judgment provides restrictions on the conduct of Microsoft, and provisions for oversight of Microsoft by the Plaintiffs and Judge Jackson.

"Jurisdiction is retained by this Court," wrote Judge Jackson.

Microsoft is barred from taking any action against OEMs for using or producing any product or service that competes with a Microsoft product or service.

Microsoft must use "uniform license agreements with uniform terms" when licensing its operating systems.

Microsoft is required to disclose to ISVs, IHVs, and OEMs all APIs, Technical Information and Communications Interfaces that Microsoft employs to enable Microsoft applications, including browsers, to interoperate with Microsoft Platform Software.

Microsoft is barred from taking any action that will interfere with or degrade the performance of any non-Microsoft Middleware (such as browsers, e-mail client software, multimedia viewing software, and the Java Virtual Machine) when interoperating with any Windows Operating System Product.

Microsoft is barred from "exclusive dealing".

Microsoft is barred from "tying" an operating system to another product.

Microsoft is barred from "binding" an operating system to another product.