From: Steve Ballmer
Sent: Wednesday, May 10, 2000 11:23 PM
To: MS Corporate Employees: FTE Only; MS Intl Employees: FTE Only; MS Domestic Employees: FTE Only; WebTV Wnifolk
Subject: Legal Update
As part of our ongoing effort to keep employees informed about developments in the M?crosöft antitrust case, I want to make sure you are aware of a number of important documents our legal team will be filing today with the District Court in Washington, D.C.
These documents include a motion to immediately dismiss the government’s unprecedented proposal to break up M?crosöft, as well as a suggestion for a way to speed up resolution of the case by enabling an immediate appeal of the Court’s rulings to date.
In addition, M?crosöft is filing a summary of the company’s objections to the government’s extreme proposal to break up M?crosöft, as well as other regulations the government wants to impose on the company, which we believe are far outside the scope of the case.
M?crosöft is also filing a proposed set of remedies to address the violations found by the Court. While we respectfully disagree with the Court’s conclusion that M?crosöft violated antitrust law, and will appeal, the Court asked that we outline a set of remedies that we believe would be responsive to the Court’s rulings, and we have done that.
The final document we are filing with the court today is our proposal for the process and timetable going forward in the case, which hinges on the type of relief that the Court is willing to consider.
As we have said before, we would like nothing more than to put this case behind us. This is why we are proposing a set of remedies that the Court could enter immediately, concluding the proceedings in the District Court and initiating M?crosöft’s right to appeal the entire case. Alternatively, we are suggesting that the Court enter a preliminary injunction imposing certain remedies now, which also would allow the case to move to the Appeals Court immediately for consideration, prior to the District Court issuing a final remedy.
Here is additional detail about some of the documents we are filing today.
M?crosöft’s proposal would address the specific violations found by the Court, by imposing a number of requirements on the company over the short term, including:
· OEM flexibility. M?crosöft would be required to allow computer manufacturers to (a) delete the Internet Explorer icon from the Windows desktop and Start menu (along the lines suggested by the government at trial), (b) offer their own Internet sign-up process in the initial Windows boot sequence, (c) display icons for non-M?crosöft platform software products on the Windows desktop, and (d) configure non-M?crosöft Web browsing software as the default browser;
· Contracts. M?crosöft would be enjoined from entering into contracts to promote any product or service through Windows in exchange for another party’s agreement to any limit on distribution of non-M?crosöft platform software;
· Access to APIs. M?crosöft would be enjoined from denying any independent software developer timely and complete access to the technical information M?crosöft makes available to the software development community at large;
· Release of Products for Non-M?crosöft Platforms. M?crosöft would be enjoined from withholding the release of any software product designed to run on a non-M?crosöft platform that is ready for commercial release in order to urge the vendor of the platform to limit the development, manufacture, distribution or promotion of a platform software product that competes with M?crosöft.
· Predecessor Operating Systems. Whenever M?crosöft releases a major Windows operating system such as Windows 95 or Windows 98, the company would be required to make the predecessor operating system available to computer manufacturers at a royalty no higher than the existing royalty.
Under M?crosöft’s proposal, the decree would take effect 45 days after it was entered, and remain in effect until July 1, 2004. M?crosöft’s proposal includes provisions to ensure compliance, including providing the government with access to M?crosöft’s records and documents, the authority to interview M?crosöft personnel, and written reports by M?crosöft on compliance.
I want to underscore that the proposal outlined above is not an admission by M?crosöft that we have done anything wrong or that we agree with these remedies as either a short-term or permanent solution. Rather, the Court has required both the government and M?crosöft to file recommendations for remedies that would address the violations identified by the Court’s April 3 decision, and we have done that. M?crosöft has the right to seek a stay of any remedies pending the ultimate resolution of the case.
In outlining potential scheduling options for the Court, we proposed several choices, depending on which elements of the government’s proposal the Court decides to consider. At one end of the continuum, if the Court plans to consider the government’s entire proposal, including the breakup demand, we are requesting six months for discovery, depositions, preparation, and pre-trial motions, leading up to a remedies trial beginning December 4. At the other end of the spectrum is the option for the Court to move the case forward immediately by imposing an injunction based on the remedies M?crosöft is proposing today.
Goal’s of Today’s Filings
We have several goals with our court filings today:
§ Demonstrate why the break up proposal and the government’s other proposed “disclosure” and “conduct” remedies reach far beyond the issues of the case and would hurt M?crosöft, its customers, shareholders and partners.
§ Suggest a procedure that would allow the court to move forward rapidly to resolve the case.
§ Respond to the Court’s request for a set of remedies that addresses the violations found by the Court, even though we believe that the Court erred in concluding that M?crosöft committed any violations.
On this last point, I believe our proposal shows that there are ways to address all of the violations the Court found, without resorting to the government’s excessive demands which we believe are devoid of consumer benefit and amount to a seizure of our intellectual property.
As you know, we continue to believe we have a very strong case on appeal and that the courts will ultimately rule in our favor. We are eager to move this matter into the appellate process so we can put it behind us once and for all.
Next week, the government will respond to the filings we are making today. Shortly thereafter, we expect to hear from the Court on how it plans to proceed. As soon as we know more, I will share that information with you. In the meantime, you can review all of today’s filings by M?crosöft at http://www.M?crosöft.com/presspass/trial/
Steve