Microsoft Appears Set on Battling in Court


Microsoft Corp. Chief Executive Steve Ballmer threw cold water Thursday on hopes for a negotiated settlement to the Justice Department's antitrust lawsuit against the company, saying he was willing to fight in court over the right to include other products with Microsoft operating systems.

A federal appeals court in June ruled that Microsoft had acted illegally to protect its monopoly on personal computer systems, but left it to a lower court to decide whether the company improperly tied products together.

After that ruling, Ballmer and Microsoft Chairman Bill Gates repeatedly said they would like to work out a settlement to the case, and representatives from the company, Justice Department and states that are suing the company met Monday.

That preliminary session broke up without new meetings scheduled, and Gates and Ballmer implied in a question-and-answer session with financial analysts that the near-term prospects were dim.

Asked about chances for more talks, Gates instead criticized officials for bringing the case. And he lashed out at rival AOL Time Warner Inc., which he accused of asking computer makers to delete some Microsoft programs.

Gates and Ballmer said they were happy with parts of the appeals court ruling and would take their chances before a new judge. They said nothing in the order would stop them from adding instant messaging and other parts to Windows XP, which the company plans to ship to manufacturers next month.

The appeals court said benefits to consumers from any bundling should be weighed against the negative effects of Microsoft trying to extend its monopoly power.

"The ruling made clear the most important fact. The test for new products is, is the functionality good for consumers, and does it balance whatever other concerns are out there?" Ballmer said. "That's a test we're ready and willing to be judged by.

Microsoft has asked the appeals court to clarify its position on that point, and it said it may still appeal to the Supreme Court.

Thursday's comments, at an annual presentation to analysts at the company's Redmond campus, suggest Microsoft believes it can win on the most important issues of strategy, whatever punishment is given for its past behavior.

"We stand on our record," Gates said.

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