Regulators Welcome Microsoft’s Interest in Settling Antitrust Case
The Justice Department on Monday said it welcomed Microsoft Corp.’s apparent growing interest in settling its long-running antitrust case, but said it has not been in contact with the company and warned that any settlement deal must ensure that “similar antitrust violations do not occur in the future.”
Microsoft acknowledged Monday that it plans to take steps aimed at ending the biggest antitrust case since the breakup of the Bell telephone monopoly. The company has previously said it was open to negotiations, but said it had become more motivated after U.S. District Judge Thomas Penfield Jackson told the company and Justice Department officials in a private meeting last month that it would be in the interest of both parties to settle their dispute out of court.
The company would not elaborate on what steps it will take or whether it even has a settlement proposal to make. One sticking point may be a disagreement between the company and the government about who is supposed to make the first move.
The two sides remain far apart on how they would resolve their dispute. But they are under intense pressure to settle the case, the outcome of which could affect how consumers collect and manage information in the future.
“We are taking very seriously the judge’s direction to both parties that we explore whether some form of settlement is possible,” said Microsoft spokesman Mark Murray. “We’ve said all along that we are open to working with the government to resolve their concerns so long as we can maintain the fundamental principle that we are allowed to innovate and add new features to our product.”
In a statement released Monday, Joel Klein, chief of the Justice Department’s antitrust division, said the government had not officially heard from Microsoft, but added that “the Justice Department has always been and remains open to a settlement that fully protects consumers and assures that similar antitrust violations do not occur in the future.”
The Justice Department, 19 states and the District of Columbia have alleged that Microsoft has used its flagship Windows operating system--which runs 90% of the world’s personal computers--to dominate emerging information technology such as Internet Web browsers and multimedia applications.
Microsoft disputes the government’s charges, and its chairman, Bill Gates, has vowed to draw a firm line against any government interference in his company’s “ability to innovate” with its software products.
The two sides twice tried to settle their differences nearly a year ago before the trial began.
The government, emboldened by a series of Microsoft courtroom gaffes that raised questions about the credibility of its witnesses, has recently raised the bar for any deal.
“As a litigator, I am willing to talk settlement at any time with anybody, but the price is higher at certain times than at others,” said Wayne Klein, a Utah assistant attorney general who is supervising the state’s participation in the antitrust litigation. “I welcome the overtures; I’m happy to talk to Microsoft. But what we would accept is going to be more in line with what we are expecting to get at trial than we may have been willing to settle for last May.”
As part of any settlement negotiation, the government is expected to insist that Microsoft either license Windows to competitors, thereby giving up its dominance in PC operating systems, or stop bundling programs such as the Internet Explorer Web browser with Windows.
The outcome of the trial remains up in the air. Nevertheless, industry observers and antitrust experts--convinced that Judge Jackson will uphold at least part of the government’s case--say it is likely that Microsoft will have to accept some severe restrictions in order for the government to drop its case.
Microsoft itself has signaled a willingness in recent weeks to discuss altering some of its business practices in an effort to strike a deal with the government. Microsoft officials say they would be willing to curb the use of certain software licensing deals with computer makers and Internet service providers. The government introduced evidence at trial suggesting that some of the licensing agreements are anti-competitive and hinder the distribution of rival software products such as Netscape Communications Corp.’s popular Web browser.
Microsoft officials also expressed willingness to formalize verbal agreements they have made with some computer makers to give them more leeway to alter the way the initial Windows screen looks when a PC is turned on.
But Microsoft continues to argue that the government has produced insufficient evidence to show its products or practices have harmed consumers. As a result, experts say Microsoft will likely balk at a breakup of the company, compulsory licensing of its software to rivals or other structural sanctions.
“If Microsoft thinks the judge believes there has been a weak showing of consumer harm, they may say ‘We are willing to stop certain practices but don’t harm consumers by forcing us to change around a product that they like,’ ” said John S. Wiley Jr., a UCLA law professor who served as a consultant to the Federal Trade Commission in its recently settled antitrust case against Intel Corp.
The Microsoft trial remains in recess until at least April 12. However, the resumption of the trial is likely to be delayed by a drug conspiracy trial that began Monday before Judge Jackson. That trial is expected to last five to six weeks.
