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DOJ Officials Hold News Conference on Microsoft Ruling

Aired June 7, 2000 - 4:58 p.m. ET


TERRY KEENAN, CNN ANCHOR: OK. We want to take you back down to Washington at the Justice Department. There you see Attorney General Janet Reno. Let's listen in.


JANET RENO, U.S. ATTORNEY GENERAL: As you know, the court has just announced in the -- its remedy in the Microsoft case. I'm pleased that the court has ordered a strong, effective remedy to address the serious antitrust violations that Microsoft has committed.

The court's remedy strikes the right balance. The structural remedy will stimulate competition that will have a lasting impact on this important industry. In the interim, conduct relief will ensure that Microsoft cannot break the law while the structural provisions are taking effect.

Today's ruling will have a profound impact not only by promoting competition in the software industry, but also by reaffirming the importance of antitrust law enforcement in the 21st century and the importance of competition.

I am so very proud of all the hard work and efforts of this team. With the remarkable trial work of David Boies and Phil Malone, all the other attorneys from the San Francisco field office, the paralegals, the computer technicians and others.

Joel, your team has demonstrated once again that the Department of Justice can meet any challenge in discharging our duty to enforce the law and it's a great feeling. Your efforts will protect competition and ensure that consumers have more choices and improved products in the marketplace.

I also want to tell the attorneys general how happy I am you're here today. Tom Miller and Dick Blumenthal are representing the state attorneys general who have worked so well and so tirelessly on this case. The cooperation of federal and state law enforcement has been superb.

And, Joel, thank you for your leadership, your vision, your absolute determination which have provided the American people with an outstanding example of the legal system at its best.

Joel? JOEL KLEIN, U.S. ASSISTANT ATTORNEY GENERAL: Good afternoon. First, let me thank you, Attorney General Reno, for your comments and for your unwavering support and leadership throughout this entire case.

The court's order today is the right remedy for Microsoft's serious and repeated violations of the antitrust laws. It will stimulate competition in the PC operating system market and throughout the entire computer industry.

When the remedy is implemented -- and this is the key point -- customers, consumers in a free and competitive marketplace will decide for themselves what software they want to purchase. Neither a monopolist nor the government will dictate that choice.

The court had an extraordinary record upon which to enter today's order. Judge Jackson had this case before him for more than two years. He heard all the testimony and arguments and reviewed thousands and thousands of documents during the 78-day trial. He carefully weighed the evidence and made extraordinarily detailed findings of fact. He analyzed the legal precedents and issued lengthy conclusions of law.

He found that Microsoft had repeatedly abused its monopoly power and violated the law by crushing emerging threats to Windows' dominance and specifically by increasing the barriers to entry into the PC operating system market.

The remedy the court ordered, breaking Microsoft into a operating systems company and an applications company, is fair and it's measured. Indeed, it directly flows from the extensive findings and legal conclusions that the court had previously entered. That's what the law requires and that's what Judge Jackson did.

Sustained abuse of monopoly power is among the most serious and most damaging of all antitrust violations, since it eliminates the competition that creates innovation and choice in the marketplace.

Microsoft repeatedly used its operating system monopoly to eliminate threats posed by cross-platform software products, cross- platform products that would have essentially allowed other operating systems to compete with Windows.

The divestiture will give the applications company every incentive to develop precisely those kinds of cross-platform products on its own, and to make the key Office productivity suite available for other operating systems. All of this will stimulate competition and innovation.

And the interim restrictions on the operating systems company are needed to permit competition to emerge. They are narrowly tailored to prohibit Microsoft from repeating the past illegal actions.

And three years after divestiture is implemented, all of the interim conduct provisions will terminate. All that will remain are provisions to stop the two companies from colluding with one another. By then, competition, not regulation, will limit Microsoft's power to thwart innovation.

After divestiture, I expect both companies will be vibrant, strong and successful firms. Each will be free to create new, exciting products, and they will have every incentive to compete vigorously with one another and with others in this industry. That competition will benefit America's consumers and the entire economy.

I'm very proud of the antitrust division for the extraordinary work done by our entire team in assembling the evidence, presenting it to the court and preparing and submitting our remedy. These people, starting with David Boies and Phil Malone -- and David unfortunately could not be here today because he has trial proceedings in Florida -- these people have demonstrated a fact that is forgotten all too frequently today, and that is that government service can be a noble calling in which dedicated men and women work hard, usually with little or no recognition, to enforce our country's laws and to protect the public interest. America is in their debt.

I also want to pay tribute to my friends, Attorney General Tom Miller and Dick Blumenthal and their colleagues in the states. They, too, are dedicated public servants, and we have worked well together to enforce the laws over these many months.

And in closing, I want to stress that Microsoft itself is responsible for where things stand today.

Its repeated illegal actions were the results of decisions made at the highest levels of the company over a lengthy and sustained period of time that reflected defiance of, not respect for, the rule of law. Today's decision marks an important step in addressing the serious effects of Microsoft's illegal actions and requiring the company to obey the law.

And Tom, it's my pleasure to turn it over to you.

TOM MILLER, ATTORNEY GENERAL OF IOWA: Thank you, Joel. And of course I want to start by paying tribute and acknowledging the extraordinary courage and incredible work by Attorney General Reno, Assistant Attorney General Joel Klein, the legendary David Boies, the incredibly hard working Phil Malone, and everybody else on the federal team. They were a great team.

And I also want to acknowledge my 18 colleagues and their staffs in the states. We're a terrific team, too.

And I want to particularly mention two people that were our lead counsels during this two-year period: Steve Houck (ph) from New York and Kevin O'Connor (ph) of Wisconsin.

Together, as the judge referred in his opinion, the collective effort of the senior officials at the Department of Justice and the 19 states brought forward a good product.

We worked hard. I believe we worked in the public interest, and I believe we did our best. Today's opinion -- today's order by Judge Jackson, I believe is strong, but yet fair and measured. And that combination, strong, fair and measured, produces a good remedy.

It's strong, because it does break up the company into two companies. It's strong in certain aspects of the conduct relief, but yet it's fair.

It's fair for a number of reasons, let me mention two. One is Microsoft had a lot of warning. They had the FTC proceeding. They had the consent decree proceeding, and then as Judge Jackson found, in spite of that, they had repeated serious violations.

The other reason it's fair is because what the evidence showed that Microsoft, when they were confronted with important and perhaps difficult competition, their resort was to their monopoly; to use that in an illegal way to maintain that monopoly or to use it in other ways. It was not reaching for a better product or for innovation. It was reaching for that crutch -- that illegal crutch. So it's fair in that situation.

And it's measured, because, as was discussed in the May 24 hearing, it could have been more, it could have been stronger, it could have been three companies, it could have been broken up into the baby Bills, but this is the least intrusive of the divestitures that are possible. And that has two important consequences in its measured qualities.

One is that the question of compatibility that some consumers rightly are very concerned about is not put in jeopardy. And secondly, it maintains the highest possible shareholder value, probably increases shareholder value in the opinion of many experts.

I looked at the Wall Street Journal yesterday. It showed what happened to AT&T when it was broken up and the enormous increase in shareholder value. That potential is here as well.

It's the right remedy because of those qualities: strong, fair and measured. Right for consumers. Consumers always benefit by competition, they never benefit by monopoly. Consumers, most of all, will have greater choice, they'll have additional products, they may pay lower prices. They probably will have better service.

KEENAN: All right, you have been listening to the team that spearheaded the U.S. government's case against Microsoft from the Justice Department, a news conference that began with Attorney General Janet Reno wholeheartedly endorsing Judge Thomas Penfield Jackson's decision this afternoon to break Microsoft into two separate companies. The attorney general saying that such a move would boost competition in the software industry; other Justice Department lawyers saying that it would stimulate innovation and that both companies if indeed there were to be a divestiture after appeal, both companies would be vibrant and successful firms.

We now want to go back to Washington and our Steve Young, who of course has been following this case all along. And, Steve, to listen to some of the Justice Department lawyers, it sort of sounds like parents scolding a bad child when they speak about Microsoft here?

STEVE YOUNG, CNN CORRESPONDENT: That's right, Terry. They regard Microsoft as a recidivist. It occurred to me as I was listening Microsoft was the world's biggest software company. If it holds up on appeal, it no longer will be; that will be IBM. Judge Thomas Penfield Jackson, the man who did this, left the courthouse at about 5:00 straight up Eastern Time with nary a word, he got into his car, and he drove away. He has started the clock ticking. Microsoft has four months from today, no matter what else happens, to come up with a plan to reorganize itself as the government used to say. Now they use the divestiture word, and it has 90 days before further proceedings in this matter -- Terry.

KEENAN: All right, thank you very much, Steven. We should just quickly stress that no breakup is imminent. Microsoft does have the right to appeal that portion of this before there are any breakup was put into effect. That's going to do it for our coverage from the New York Stock Exchange on judgment day for Microsoft. For CNN viewers, INSIDE POLITICS is up next. And on CNNfn, "THE N.E.W. SHOW."



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