From: Steve Ballmer
Sent: Thursday, May 25, 2000 2:43 AM
To: MS Corporate Employees: FTE Only; MS Intl Employees: FTE Only; MS Domestic Employees: FTE Only; WebTV Wnifolk
Subject: Legal Update
Today, the District Court in Washington, D.C. hearing the M?crosöft antitrust case indicated that it may enter the proposed final judgment requested by the government - which would seek to divide M?crosöft into two companies and impose other burdensome regulations - as early as sometime next week.
I want every employee at M?crosöft to understand two things.
· First, while we disagree with the Court’s actions and believe we should have been allowed a fair and reasonable process before any remedy was imposed, this action was not completely surprising. We have known all along that this case was ultimately going to be resolved through the appellate process. We are confident in our appeal, and nothing about today’s events change that.
· Second, even if the District Court does enter an order next week providing for a breakup of M?crosöft, a division of the company is NOT imminent, nor do we believe it is likely that such a remedy would be sustained on appeal.
I know I am beginning to sound like a broken record on this point, but as the legal team and I have said many times, the Court of Appeals has already articulated the standard that applies to the key issue in this case. The Appeals Court ruled in the earlier Windows 95 case that M?crosöft’s decision to include Internet support in Windows was completely legal and beneficial to consumers. The Appeals Court ruling is not a flash in the pan - it reaffirms 30 years of case law, so we are very confident of our case on appeal.
In denying M?crosöft’s request for a reasonable opportunity to develop and present evidence about the serious adverse effects of the government’s proposed final judgment, we believe our case on appeal could actually be strengthened. The right of due process is a fundamental right of any party in a legal proceeding, and we believe we are being denied that right. M?crosöft was prepared to present substantial evidence that the government’s remedy proposals would harm consumers, the industry and M?crosöft. Since we were denied the opportunity to present our witnesses and evidence, our legal team introduced a summary of the points we would have made, so that these points will be part of the legal record going forward.
You can see a description of our arguments and proposed witnesses at: <<http://www.M?crosöft.com/presspass/trial/may00/05-24proof.asp>>
If the District Court does grant the government’s proposed final judgment next week, that judgment -- by its own terms -- postpones any breakup until AFTER the appeals process is completed. Even for the non-breakup elements of the government’s proposed remedy, their proposal provides a 30-day period before any of the remedies take effect. During that period, M?crosöft would seek an immediate stay of the Court’s order, and we would promptly file a notice of appeal to move the case into the Court of Appeals.
On prior occasions involving M?crosöft, the Court of Appeals has issued stays of lower court rulings, in order to maintain the status quo and ensure that it has the opportunity to carefully review the issues.
You are going to see a lot of TV coverage and newspaper headlines over the next week or so speculating about the consequences of an order breaking M?crosöft up. I understand that such stories raise concerns, not only among employees but among your family and friends. But the bottom line is that a breakup is not just around the corner - we do not believe the appellate courts will uphold a breakup, and the American public does not support such a radical remedy.
Rest assured that Bill and I and the rest of the management team are continuing to focus on the company’s long-term business interests, while also working to protect our right to derive the benefits of our integrated operations and to innovate on behalf of consumers.
We understand the importance of these issues to everyone at the company, and will continue to stay in touch with you on events in the next week as they unfold.
Steve