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By Sarah Left, 7 June 2000 23:49

NEWS A US district court judge has ruled that Microsoft will be split into two companies - an operating systems and an application business. According to Judge Thomas Penfield Jackson's final order - released after the close of the US stock markets on Wednesday - the company has four months to submit a detailed plan of divestiture. However, US anti-trust attorneys claim the conduct remedies meted out by the court will have a more significant and immediate effect than a possible divestiture. The conduct remedies include a ban on Microsoft signing exclusive contracts with OEMs, and an order for the company to release certain sections of the source code to OEMs and ISVs. Robert Taylor, the managing partner at US law firm Howrey Simon Arnold & White, said the government put together a "superb" case that should hold - at least as far as the behavioral remedies go - in the inevitable appeal. But he said the future of a company break-up is still in doubt. "The divestiture proposal itself is going to be controversial, not so much because of its impact on Microsoft, but because of its potential impact on the public," Taylor said. "One of the primary concerns that will be addressed in the Court of Appeals is whether or not the risk to the public in actually breaking up this company is a tolerable risk." While any plans to break up the company will be on hold until after the appeals process is exhausted, the conduct clauses go into effect in 90 days. During that time, Microsoft will probably ask the appellate court to put a stay on the conduct remedies as well. "This judgement has been a long time coming," said Glenn Manischin, attorney with US firm Patton Boggs. "It's been clear that the only remedy that will work is a break up, given Microsoft's predisposition for breaking the law." Manischin expects that once Microsoft has filed an appeal, the judge will recommend that the case go straight to the Supreme Court and bypass the Court of Appeals.