Microsoft breakup is possible, admits Justice Department enforcer

The US Justice Department admitted for the first time on Sunday that a breakup of Microsoft was on the cards in the wake of Friday's historic ruling that the company had abused its monopolistic position in the software industry.

Although the possibility of a breakup has been the subject of widespread speculation during the drawn-out hearings, the Justice Department has been careful not to comment on such ideas.

But speaking on the US news programme This Week, the department's chief enforcer, Joel Klein, head of the antitrust division, said that such a breakup was "in the range" of options. "We're looking at a lot of remedies," he said, "but it's premature of us to get ahead of the story."

But he added: "We're concerned with competition. This is not a penal action. A proper remedy will make sure the market remains maximally competitive so that consumers can have real choices and so that everyone can innovate."

One option could split Microsoft into three companies - one to produce the Windows operating system, one to produce application software like Excel, Powerpoint and Word, and one to run its Internet and multimedia businesses. The other main option would be the 'Baby Bill' approach. This would mean creating a handful of new companies that would each have proprietary responsibility for Windows and Microsoft's other software products.

A settlement is still an option, but in the wake of Jackson's uncompromising ruling, the Justice Department would appear to have little reason to make any concessions and Microsoft has little room for manouevre. In a full-page advertisement in the Washington Post on Sunday, presented as a letter "to our customers, partners and shareholders," Bill Gates said, "Microsoft is committed to resolving this matter in a fair and responsible manner, while ensuring that the fundamental principles of consumer choice and innovation are protected."