White House to Be Briefed on Microsoft

By Randall Mikkelsen

WASHINGTON (Reuters) - The U.S. Justice Department will brief President Clinton's economic team on Tuesday on its proposal to break Microsoft (NasdaqNM:MSFT - news) in two in its effort to promote competition in the software industry.

White House spokesman Jim Kennedy said no decisions would emerge from the noon briefing. ``The Justice Department is providing an informational briefing to the president's economic team,'' he said.

Expected to take part in the meeting are Treasury Secretary Lawrence Summers, National Economic Council head Gene Sperling, White House counsel Beth Nolan and Martin Baily, chairman of the White House Council of Economic Advisers, Kennedy said.

The U.S. government and 19 states suing Microsoft have until Friday to present proposed remedies in the landmark antitrust trial, after Judge Thomas Penfield Jackson ruled on April 3 that the company abused its monopoly in the Windows operating system.

Reuters Photo Audio/Video The Justice Department Is Reported To Be Close To Recommending That Microsoft Corp. Be Split In Two To End Its Operating System Monopoly Windows Media - 28.8 | 56 Realplayer G2 Download Players Here

On Monday, a source familiar with the case said the Justice Department was likely to propose that the company be split in two, with one focusing on the Windows operating system and the other on applications, such as Microsoft Office programs.

State attorneys general discussed the Justice Department plan in a conference call on Monday.

Microsoft immediately said any proposal to break the company up was outside the scope of the trial and would extend the already long-running proceedings.

``It's almost like a whole new trial,'' Microsoft spokesman Jim Cullinan said. ``They're going to have to justify their remedies.''

Microsoft opened slightly firmer on Tuesday after falling sharply the previous day. Its shares were up 1 ^7/16 at 68 ^1/16 by mid morning.

The Justice Department and a spokesman for Iowa Attorney General Tom Miller, who is heading the states' effort, had no comment on news of the government's break-up proposal.

In addition to proposing to break the company up, the source said the department was also likely to seek stringent limits on the firm's conduct while the case is being appealed.

Microsoft could ask a higher court to stay the conduct limits when it appealed.

Once the government files its proposed remedies, Microsoft will reply on May 10 with its objections, its own proposed remedy and its suggestions for the process during the remainder of the trial. The government will file once more on May 17.

Jackson will hear oral arguments on a penalty on May 24.