Microsoft Settlement Talks Accelerate

WASHINGTON (03/24/2000) - The antitrust trial of the digital age might be swiftly coming to a conclusion as settlement talks reportedly accelerate and the trial judge nears a final ruling on whether Microsoft Corp. broke antitrust laws.

Nearly two years after the U.S. Department of Justice (DOJ) and 19 U.S. states filed charges against the software giant, chief negotiators for both sides reportedly were en route to Chicago today for discussions with a mediator after the company and the government inched closer to a possible settlement.

The quickened pace of negotiations was spurred earlier in the week when U.S.

District Court Judge Thomas Penfield Jackson alerted attorneys for the governments and Microsoft that he was nearing a ruling on questions of whether the company violated antitrust law, according to published reports. In November, Jackson issued a scathing "finding of fact" that indicated he is likely to rule that Microsoft has an illegal monopoly over desktop PC operating systems and used that to harm consumers, thwart innovation and stifle competition.

Microsoft spokesman Jim Cullinan had no comment today. A spokeswoman for the Justice Department declined to comment.

Although none of the state antitrust officials would comment on the accelerated settlement talks, Wayne Klein, the antitrust chief in Utah, said his state is "open to considering" a variety of remedies to address the company's conduct.

"There are two factors we are considering," Klein said. "We want to make sure that whatever remedy we have is going to be adequate to prevent Microsoft from doing again what it has done in the past. And secondly, it is our goal to work together with the other states and the Department of Justice so that we can agree on something that everyone can live with."

Talks over the weekend were expected with a court-appointed mediator, Court of Appeals Judge Richard Posner, who has been dealing with both sides separately, with the exception of some early face-to-face encounters.

Today, USA Today reported that Microsoft is expected to make a "sweeping offer" in an attempt to settle the case, though the newspaper didn't elaborate on terms. Earlier in the week, the Wall Street Journal reported that Justice Department officials backed off on earlier demands that Microsoft be broken up into different companies, a suggestion the company rejected out of hand.

Microsoft already has suggested a willingness to allow computer-makers that license the Windows operating system more leeway to remove the company's Web-browsing functions, according to the reports. Up until now, however, the company has apparently rejected other suggestions that it charge all computer-makers the same rate for Windows and provide technical information to those companies at the same time.

One of the case's key issues has been whether Microsoft used the Windows licenses as leverage to help PC makers who acquiesced to the company's demands to carry other Microsoft products and whether it disadvantaged other PC makers who sought to sell software from Microsoft's rivals.

Some key players in the case are skeptical that any settlement is near. "Joel Klein doesn't want to end up like (his predecessor) Anne Bingaman, where he signs a deal that can't solve the problem and can't be enforced," says Ken Wasch, president of the Software and Information Industry Association. "Anne knew she made a mistake before the ink was dry. Joel Klein is more savvy than that."

Bingaman, who is now a consultant, negotiated the consent decree with Microsoft in 1995 under which the company agreed to curb some of its business practices that had provoked complaints from rivals for years.

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