Reports Say MS-DOJ Closer to Settlement

BOSTON (03/23/2000) - A Microsoft Corp. spokesman today denounced published reports, based on anonymous sources said to be close to negotiations, that the software maker and the U.S. government are closer to reaching a settlement in the ongoing federal antitrust case.

"When the reports say, 'sources close to the case,' then unfortunately the sources don't have to stand behind what they say," said Jim Cullinan, the Microsoft spokesman, adding that the sources in question must be from the government because Microsoft is following its policy of not commenting about specifics of the talks.

The Wall Street Journal and the Washington Post published similar reports today, citing anonymous sources saying essentially the same thing -- that the two sides are moving closer to an agreement that could place restrictions on how Microsoft does business, but which would not break up the company.

"It's not Microsoft," Cullinan said regarding the source of the anonymous information, adding that "Microsoft has been very consistent" in having its legal team not share details of the negotiation process, which is being conducted through a court-appointed mediator. Cullinan said that corporate communications officials have not been privy to details of the discussions, and that the mediation process is continuing.

U.S. Department of Justice spokeswoman Gina Talamona today said she is not commenting about the mediation discussions.

At the urging of U.S. District Judge Thomas Penfield Jackson, who is hearing the antitrust case, Microsoft and the U.S. Department of Justice (DOJ) have been conducting talks mediated by Richard Posner, chief judge of the 7th Circuit U.S. Court of Appeals in Chicago. The government reportedly has pushed for a break-up of Microsoft into several smaller companies. Microsoft officials have said they vehemently oppose that remedy.

Jackson is said to be close to issuing his final ruling in the matter. He ruled last November in what are called "findings of fact" that Microsoft is a monopoly and has used that power to squelch competition and extend its reach into the Internet browser market. The lawsuit filed by the DOJ and 19 state attorneys general focuses on the "tying" of the Internet Explorer browser to the Windows operating system in the most recent versions of the OS.

The government also has charged that Microsoft engaged in anticompetitive business practices in violation of U.S. antitrust law. Although Jackson has agreed that Microsoft is a monopoly and has abused that power, he has not yet ruled on whether Microsoft is in violation of antitrust law. It is not illegal in the U.S. for a company to be a monopoly. What is illegal is using monopoly power to stomp the competition.

A settlement before Jackson issues his final ruling would, ostensibly, end the federal case, although Microsoft faces dozens of civil cases that were filed following the judge's findings of fact. Information from the federal trial, including depositions and documents, could be used by attorneys for plaintiffs in the civil cases, legal experts have said.

Judge Jackson would have to approve any settlement in the case, though published reports have said that he is urging both sides to settle. That he appointed a mediator in the first place suggests his desire to have the matter resolved before he issues a ruling.

Today's published reports, which also were echoed in a Bloomberg report, opened with the likelihood of a settlement that avoids breaking up Microsoft. But the Post article later asserted that there is dissension in "the government camp" about whether mediation talks will lead to a settlement that fixes the damage that the government contends Microsoft has done. The Journal also said that some on the plaintiff side are suspicious that recent overtures by Microsoft are meant to make the company seem as if they have acted reasonably.

Meanwhile, the head of the DOJ's antitrust division spoke yesterday before a U.S. Senate panel about the case. Joel Klein reportedly declined to comment about specifics of the negotiations other than to say they are continuing. He told senators that a settlement is preferred, but would have to be consistent with the findings in the case and address Microsoft's conduct.

The DOJ did not return a telephone message seeking comment about the latest reported turn of events.

Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or DOJ can be reached at

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