Judge Jackson has ruled that Microsoft is to be broken up into two separate companies for a period of ten years. One company would deal exclusively with operating systems and the other will deal with applications. The decision was strongly worded. The present management of Microsoft seemed unwilling to accept that it had violated the anti-trust laws and as a result the Judge ruled for a structural penalty.

The breakup of Microsoft has been stayed for sixty days pending appeal. In an interview with CNBC, Gates was evasive when asked if he accepted that Microsoft broke the law. He waffled on about all the great things and ideas (typically other people´s ideas) that Microsoft was working on. However he seemed to be pinning everything on an appeal.

The ususal scare stories of how this would hurt the US economy were being floated but some commentators quoted on CNBC where not so sure. The move would widen competition and economies are founded on the principal of competition. Gates´s Microsoft was an abnormality that effectively and intentionally prevented competition. The upside of the ruling, should it ever be implemented is that it will allow for the creation of hundreds of new products. In some respects this is the equivalent of the AT&T breakup in 1984. This particular breakup resulted in the creation of a number of baby-Bell telcos and a massive reduction in long distance calling costs in the US.

Microsoft has always been lucky on appeal. This ruling was handed down in the Washington District Court and Microsoft are going to appeal it. It is not clear whether the appeal will be to the Federal or Supreme court. The ruling itself was not unexpected. However the Department of Justice, which praised the ruling, may move to have the appeal heard in the Supreme Court.