Microsoft Shifts Gears, Aims For Settlement

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March 23, 1999 (12:00 AM EST)

By Darryl K. Taft,

Microsoft officials confirmed Monday the company is open to resolving its legaldispute with the federal government and 19 states.

The Seattle Times reported two weeks ago that the software giant had indicated a willingness to pursue ways to resolve its case with the U.S. Department of Justice, on the heels of news of a settlement offer Intel made to the Federal Trade Commission.

At that time, Microsoft officials told CRN the company was open to trying to use the recess in the trial "wisely" in reference to a comment U.S. District Judge Thomas Penfield Jackson made in his chambers to attorneys from both sides in the case. Urging the parties to try to resolve the case outside the courtroom, Jackson, who is hearing the case, told the attorneys to use the time wisely.

"We're taking pretty seriously the judge's suggestion that both sides pursue settlement discussions," a Microsoft official said, adding Microsoft has "always said" it was open to negotiation.

However, a source close to the company said Microsoft continues to feel strongly that it should "maintain the fundamental right to build new features" into Windows and to keep the "destiny" of Microsoft's products in the company's hands.

It appears Microsoft and the government remain at an impasse, as at least some representatives from the states appear interested in gaining not only conduct changes from the software giant, but structural remedies against it should the government prevail in court. Such remedies could include splitting up Microsoft along business segments or breaking the company into three identical parts, each with access to Windows code.

Some observers said they find a settlement hard to believe. James Love, director of the Consumer Project on Technology, said unless Microsoft is willing to give in on the so-called integration issue, "they probably won't settle."

Meanwhile, the government is open to negotiations with Redmond, Wash.-based Microsoft. In a statement released Monday, Joel Klein, assistant attorney general in charge of the Justice Department's antitrust division, said the government had not yet received a settlement proposal from Microsoft, but is open to a settlement that "protects consumers and assures that similar antitrust violations do not occur in the future."

Microsoft sources provided no details as to a schedule for any talks with the government. However, a source said if the company could "resolve this without further litigation, that would be in everybody's best interest."

However, the Microsoft source said the company is preparing to return to court next month for the rebuttal phase of the trial. Judge Jackson ordered a recess in the trial that could end no earlier than April 12.