Microsoft Combatants to Report on Settlement

Reportedly close to a settlement of their landmark anti-trust case, lawyers for Microsoft, the Department of Justice and 18 state attorneys general go to court Friday morning to report on their progress.

Reportedly close to a settlement of their landmark antitrust case, lawyers for Microsoft, the Department of Justice and 18 state attorneys general go to court this morning to report on their progress.

Newspapers reported Thursday that the the DOJ and Microsoft had reached a tentative agreement that would leave Microsofts market might essentially unchallenged. And The New York Times said Thursday evening that the DOJ was trying hard to sell the plan to skeptical attorneys general who have taken a hard line against Microsoft from the very beginning.

The final agreement appeared to be very much in flux, but under the basic terms reported by the Times and The Wall Street Journal, the DOJ agreed to drop onerous restrictions on Microsoft licensing and intellectual property for a deal in which the software company would disclose some application programming interfaces under controlled circumstances and give computer makers more freedom to install rival programs on new PCs. Microsoft would retain the right to bundle new applications into its operating system.

The DOJ said a few weeks ago that it would likely seek dramatic behavioral remedies that could include mandatory licensing and the opening of all Microsofts APIs to anyone who wants them.

Critics howled at the apparent about-face.

"The potential for Microsoft to continue to misbehave under this reported arrangement is enormous. If the government does not push for a substantial penalty should Microsoft continue to behave in an anticompetitive manner, Microsoft is likely to continue to break the law in the future," said the Consumer Federation of America, Consumers Union and the Media Access Project in a joint statement.

Ed Black, president of the Computer and Communications Industry Association, was angry that more information on the proposed settlement has not been released.

"We want to see the details. Everybody should get a couple of days to look it over," Black said. If the reports are true, "then theyve snatched defeat from the jaws of victory."

An appeals court unanimously found in June that Microsoft had broken antitrust law and that it should be punished for illegally maintaining its operating system monopoly.

Judge Colleen Kollar-Kotelly set today as a deadline for a settlement, which has been mediated for the past three weeks by Boston University professor Eric Green. If the DOJ is successful in bringing the attorneys general on board, then the Tunney Act requires a hearing before Kollar-Kotelly can approve the deal.

The AGs could scuttle the settlement as they did once before, but Kollar-Kotelly is in uncharted legal territory if they split among themselves, said legal experts. A Tunney-Act hearing is usually a formality before a rubber-stamp approval by the judge. The states have retained celebrated attorney Brendan Sullivan to represent them should this hearing occur.

At least one state has indicated privately that it would likely not continue to fight the case if the DOJ settles. The position of the rest is unknown, since few would comment on the current settlement talks.

For those states that choose to continue, "theyll have an uphill fight," said University of Baltimore Professor Robert Lande, because theyll essentially have to try and convince Kollar-Kotelly that she was mistaken in approving the settlement in the first place.