Gatess monopoly move faces court rebuff.

THE ball bounces back into the governments court this week in the Windows anti-trust match, when Washington offers its response on Wednesday to the concessions that Microsoft offered the court last week.

But the justice department has already publicly dismissed Microsofts proposed remedies as ineffectual and full of loopholes and its announcement on Wednesday will likely be little more than posturing ahead of a court date with judge Thomas Jackson on 24 May.

That hearing, the last stage in a trial that began in October 1998, will consider the governments proposal to split Microsoft into two companies and impose tough conduct restrictions in the interim. Microsoft last week denounced the plan as unprecedented and dangerous for the US economy.

It asked Jackson to throw out the DoJs plan or, failing that, to grant it more time to prepare its case against a break-up, delaying the hearing until 4 December. An American company deserves more than 12 days to respond to a government proposal to tear apart a $400bn company, said Microsofts chief counsel, William Neukom.

Microsofts proposed remedy for the behaviour cited by Jackson in his finding of fact on 3 April includes some important concessions. Instead of breaking up Microsoft, the company says the court should order it not to discriminate among PC manufacturers, allow other browsers equal access to the Windows desktop and publish more advance information about how programs will work with new versions of the operating system.

But sceptics noted last week that Microsofts concessions are the same measures the industry and the government sought from it five years ago, and thought they had secured in 1994 in a settlement of an earlier complaint. That was before Microsoft was tried and found by Jackson to have acted like a predatory monopolist.

But Microsoft, defiantly insisting it will never be broken up, says separating Windows from the rest of its business will halt innovation in computer software. The symbiotic nature of operating systems and applications programs has improved personal computing for millions, says chairman Bill Gates.

Gates says that if the proposed plan to dismantle Microsoft had been implemented 10 years ago, it could not have created either Windows or the Office suite of applications.

But rivals such as Sun Microsystems chief executive Scott McNealy dismiss this as a classic Microsoft argument.

On the one hand, they insist Windows is an open platform with equal access for all, while on they other they insist the two parts of the company have to stay together or theyll lose business.

Microsoft has already announced plans to appeal against Jacksons 3 April ruling, and so its request for a six-month delay prompted suggestions that it is just the first of a long string of delaying tactics.

Microsoft benefits from every day this case continues, analysts say, giving it more time to implement a new Net-centred business model. In a year or so, it will be far better placed to settle the case by accepting an end to its dominance of the PC market, having already moved to more promising territory.

The pace of change in the market is quicker than the pace at which the government can bring this case, says Washington-based attorney Phillip Proger.

Last week at a Las Vegas conference, Gates touted Next Generation Windows Services, the e-commerce Web server software at the heart of Micro-softs new internet strategy. It was evidence of the companys plans to weave its new Windows 2000 into most of the worlds e-commerce server software that encouraged anti-trust regulators to ask for the stiff remedies.

But anti-trust experts say Microsoft may change its mind about slowing the proceedings if Jackson agrees this summer to impose the interim conduct restrictions the government is seeking, which would make it illegal for the company to tie future use of Windows to other Microsoft products.

Industry sources say that could threaten Microsofts strategy to employ component applications that will only work with servers using its operating system.

Things could accelerate dramatically if Gates concludes that the conduct measures will damage Microsoft sooner, and arguably more profoundly, than splitting off his PC software business will do, says one internet company executive.