Microsoft should be split into two companies in order to end its monopoly in the software industry, the Justice Department said in its filing Friday in U.S. District Court in Washington.
The final version of the government's proposed remedy was presented to Judge Thomas Penfield Jackson, who earlier ruled that Microsoft had violated federal antitrust laws and was therefore a monopoly.
Jackson surprised both sides on Wednesday by ordering the Justice Department to submit its final proposals as soon as possible. Microsoft has the Memorial Day holiday weekend to prepare a response.
The company said it was not surprised by the government's final tweaks to the proposal, calling them essentially cosmetic, and again decried any breakup plan as "excessive and unwaranted." The company has said it will appeal any punishment levied by the court.
"We are confident the law and the facts are on our side," said Microsoft spokesman Mark Murray.
Whatever Microsoft's public response, its legal rejoinder to the DOJ's plan probably won't be enough to satisfy Jackson, who appears ready to accept the proposal and order Microsoft to be broken up. The likeliest scenario has Microsoft being divided into two companies: one to make the Windows operating system and another to make everything else, especially the dominant Microsoft browser.
Microsoft -- which responded to Jackson's monopoly ruling by proposing its own set of rather tepid remedies -- can be expected to appeal. That process could tie things up for months, even years.
In the meantime, the company would face restrictions on its conduct. Microsoft is expected to ask an appeals court to suspend those provisions, too.
The government's proposal, filed as an order that Jackson could sign and issue, would impose those restrictions on Microsoft starting 90 days after being approved by the judge.
If Microsoft is ultimately broken up, it would be the harshest antitrust penalty leveled against an American corporation since AT&T agreed to spin off the regional "Baby Bells" in 1982.
Shortly after the DOJ filed on Friday, Microsoft said it was delaying a planned strategy session on its next-generation Windows operating system. Company officials cited the expected court decree for the three-week delay.
Microsoft, which had been expecting a rather leisurely series of hearings on a penalty, was stunned by Jackson's apparent eagerness to resolve things quickly.
He even offered his own possible scenario for a three-way breakup, although that appears unlikely in light of the government's final recommendation, which envisions only two companies.
The government continued to blast Microsoft for its cynical approach to resolving the case, pointing out that while Microsoft wanted more hearings before Jackson settled on a penalty, the company did not get specific about witnesses until he said there would be none. Microsoft was simply trying to present the appearance of an unfair hearing to bolster its future appeals case, the DOJ said.
Microsoft called the government's accusations "disingenuous," and claimed that it had followed the court's filing instructions "to the letter."
Microsoft said it would, if given the chance, have put Microsoft Chairman Bill Gates and President Steve Ballmer on the stand, a place both men carefully avoided during the trial.
Had Gates and Ballmer appeared, they would have been subject to cross examination and the government could have obtained more potentially damning emails.
Reuters contributed to this report.
