UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF COLUMBIA

_____________________________ ) 
UNITED STATES OF AMERICA, ) 
                                                        )
Plaintiff,                                             ) 
                                                        )
v.                                                     ) Civil Action
No. 98-1232 (TPJ                            ) 
                                                        )
MICROSOFT CORPORATION, ) 
                                                        )
Defendant.                                         ) 
_____________________________) 
                                                        )
STATE OF NEW YORK, et al., ) 
                                                        )
Plaintiffs, ) 
                                                        )
v.                                                     ) 
                                                        )
MICROSOFT CORPORATION,   ) 
                                                        )
Defendant.                                        ) 
____________________________) Civil Action
No. 98-1233 (TPJ) 
                                                        )
MICROSOFT CORPORATION,   ) 
                                                        )
Counterclaim-Plaintiff,                      ) 
                                                        )
                                                        )
ELIOT SPITZER, attorney general of the ) 
State of New York, in his official      ) 
capacity, et al.,                                 ) 
                                                        )
Counterclaim-Defendants.                 ) 
____________________________________) 

MEMORANDUM AND ORDER


These cases are before the Court for disposition of the sole matter
presently remaining for decision by the trial court, namely, entry of
appropriate relief for the violations of the Sherman Act, 1 and 2, and
various state laws committed by the defendant Microsoft Corporation as
found by Court in accordance with its Findings of Fact and Conclusions of
Law. Final judgment will be entered contemporaneously herewith. No
further proceedings will be required.

The Court has been presented by plaintiffs with a proposed form of final
judgment that would mandate both conduct modification and structural
reorganization by the defendant when fully implemented. Microsoft has
responded with a motion for summary rejection of structural reorganization
and a request for months of additional time to oppose the relief sought in all
other respects. Microsoft claims, in effect, to have been surprised by the
"draconian" and "unprecedented" remedy the plaintiffs recommend. What it
proposes is yet another round of discovery, to be followed by a second
trial - in essence an ex post and de facto bifurcation of the case already
considered and rejected by the Court.

Microsoft's profession of surprise is not credible.(1) From the inception of
this case Microsoft knew, from well-established Supreme Court
precedents dating from the beginning of the last century, that a mandated
divestiture was a possibility, if not a probability, in the event of an adverse
result at trial. At the conclusion of the trial the Court's Findings of Fact
gave clear warning to Microsoft that the result would likely be adverse, yet
the Court delayed entry of its Conclusions of Law for five months, and
enlisted the services of a distinguished mediator, to assist Microsoft and the
plaintiffs in reaching agreement on a remedy of some description that
Microsoft knew was inevitable. Even assuming that Microsoft negotiated in
utmost good faith in the course of mediation, it had to have in
contemplation the prospect that, were mediation to fail, the prevailing
plaintiffs would propose to the Court a remedy most to their liking and
least likely to be acceptable to Microsoft. Its failure to anticipate and to
prepare to meet such an eventuality gives no reason to afford it an
opportunity to do so now.

These cases have been before the Court, and have occupied much of its
attention, for the past two years, not counting the antecedent proceedings.
Following a full trial Microsoft has been found guilty of antitrust violations,
notwithstanding its protests to this day that it has committed none. The
Court is convinced for several reasons that a final - and appealable -
judgment should be entered quickly. It has also reluctantly come to the
conclusion, for the same reasons, that a structural remedy has become
imperative: Microsoft as it is presently organized and led is unwilling to
accept the notion that it broke the law or accede to an order amending its
conduct. 

First, despite the Court's Findings of Fact and Conclusions of Law,
Microsoft does not yet concede that any of its business practices violated
the Sherman Act. Microsoft officials have recently been quoted publicly to
the effect that the company has "done nothing wrong" and that it will be
vindicated on appeal. The Court is well aware that there is a substantial
body of public opinion, some of it rational, that holds to a similar view. It is
time to put that assertion to the test. If true, then an appellate tribunal
should be given early opportunity to confirm it as promptly as possible, and
to abort any remedial measures before they have become irreversible as a
practical matter.

Second, there is credible evidence in the record to suggest 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. Microsoft has shown no
disposition to voluntarily alter its business protocol in any significant
respect. Indeed, it has announced its intention to appeal even the
imposition of the modest conduct remedies it has itself proposed as an
alternative to the non-structural remedies sought by the plaintiffs.

Third, 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. If it responds in similar fashion to
an injunctive remedy in this case, the earlier the need for enforcement
measures becomes apparent the more effective they are likely to be.

Finally, the Court believes that extended proceedings on the form a
remedy should take are unlikely to give any significantly greater assurance
that it will be able to identify what might be generally regarded as an
optimum remedy. As has been the case with regard to Microsoft's
culpability, opinion as to an appropriate remedy is sharply divided. There is
little chance that those divergent opinions will be reconciled by anything
short of actual experience. The declarations (and the "offers of proof")
from numerous potential witnesses now before the Court provide some
insight as to how its various provisions might operate, but for the most part
they are merely the predictions of purportedly knowledgeable people as to
effects which may or may not ensue if the proposed final judgment is
entered. In its experience the Court has found testimonial predictions of
future events generally less reliable even than testimony as to historical fact,
and cross-examination to be of little use in enhancing or detracting from
their accuracy. 

In addition to its substantive objections, the proposed final judgment is also
criticized by Microsoft as being vague and ambiguous. Plaintiffs respond
that, to the extent it may be lacking in detail, it is purposely so to allow
Microsoft itself to propose such detail as will be least disruptive of its
business, failing which plaintiffs will ask the Court to supply it as the need
appears.

Plaintiffs won the case, and for that reason alone have some entitlement to
a remedy of their choice. Moreover, plaintiffs' proposed final judgment is
the collective work product of senior antitrust law enforcement officials of
the United States Department of Justice and the Attorneys General of 19
states, in conjunction with multiple consultants.(2) These officials are by
reason of office obliged and expected to consider - and to act in - the
public interest; Microsoft is not. The proposed final judgment is
represented to the Court as incorporating provisions employed successfully
in the past, and it appears to the Court to address all the principal
objectives of relief in such cases, namely, to terminate the unlawful
conduct, to prevent its repetition in the future, and to revive competition in
the relevant markets. Microsoft's alternative decree is plainly inadequate in
all three respects.

The final judgment proposed by plaintiffs is perhaps more radical than
might have resulted had mediation been successful and terminated in a
consent decree. It is less so than that advocated by four disinterested amici
curiae. It is designed, moreover, to take force in stages, so that the effects
can be gauged while the appeal progresses and before it has been fully
implemented. And, of course, the Court will retain jurisdiction following
appeal, and can modify the judgment as necessary in accordance with
instructions from an appellate court or to accommodate conditions
changed with the passage of time.

It is, therefore, this _____ day of June, 2000,

ORDERED, that the motion of defendant Microsoft Corporation for
summary rejection of the plaintiffs' proposed structural reorganization is
denied; and it is

FURTHER ORDERED, that defendant Microsoft Corporation's "position"
as to future proceedings on the issue of remedy is rejected; and it is

FURTHER ORDERED, that plaintiffs' proposed final judgment, as revised
in accordance with the proceedings of May 24, 2000 and Microsoft's
comments thereon, be entered as a Final Judgment herein.


______________________
Thomas Penfield Jackson
U.S. District Judge


1. Despite their surprise, compounded no doubt by the Court's refusal on May 24th
to allow discovery and take testimony on the issue, Microsoft's attorneys were
promptly able to tender a 35-page "Offer of Proof," summarizing in detail the
testimony 16 witnesses would give to explain why plaintiffs' proposed remedy, in its
entirety, is a bad idea. Within a week they added seven more. 

2. Two states dissented from the imposition of structural remedies but fully
supported the remainder of the relief proposed. The absence of total unanimity
merely confirms the collaborative character of the process by which the proposed
final judgment was formulated.