Microsoft Judge Halts Remedy Hearings; Considers Three-Way Breakup

Microsoft suffered another setback in its antitrust trial today, as presiding Judge Thomas Penfield Jackson ordered remedy hearings halted after a single day of testimony and indicated he would consider a three-way split of the company.

During the proceedings in Washington, D.C., Jackson praised the merits of a friend-of-the-court brief filed by two industry trade groups that calls for dividing Microsoft into three companies that would sell operating systems, applications, and Web browsing software, respectively. "A bisection will, in effect, create two monopolies," Jackson said of the remedy proposed last month by the U.S. Department of Justice and several states suing Microsoft for antitrust violations.

The judge asked government lawyers to file a revised version of their proposal by Friday, then gave Microsoft until May 30 to respond. Microsoft also said in a court filing Tuesday that it would have called chairman Bill Gates and president and CEO Steve Ballmer to testify during the remedy hearings, had it been given the chance.

After their day in court, Microsoft lawyers were already looking ahead to the appeals process. "We are very near the appellate phase of this controversy," Microsoft general counsel Bill Neukom said after the hearing. On appeal, Microsoft plans to challenge the court's procedures, as well as each phase of Jackson's ruling, Neukom said.