Microsoft settlement deal doesn't look promising
BY JAMES V. GRIMALDI
Washington Post
WASHINGTON -- Time is running out for a deal between Microsoft
Corp. and government attorneys, who are skeptical that the software
company's proposal to settle an antitrust lawsuit will restore
competition to the market for personal computer operating systems,
people familiar with the talks said Sunday.
The settlement deadline is Tuesday, but efforts to reach a deal were
complicated by a division between the Justice Department and 19
state attorneys general. The Justice Department believes a
conduct-restraining settlement is possible, but some of the state
attorneys general would prefer the clarity of a federal judge's verdict
to the potential uncertainty of a mediated settlement, sources close to
the talks said.
Though there isn't unanimity among the states either, some hard-liners
among the states also fret that talks center on placing limits on certain
Microsoft business practices rather than on breaking up the
Redmond, Wash., company, which U.S. District Judge Thomas
Penfield Jackson has ruled is a monopoly. Jackson ruled that the
company used that monopoly to harm competition, innovation and
consumers. He next will rule on whether those acts broke antitrust
law.
The attorneys worked Sunday by fax, phone and e-mail, answering
questions and responding to proposals exchanged through Richard
Posner, a federal appeals court judge in Chicago who volunteered to
mediate a settlement.
Jackson told lawyers last week that he was prepared to issue his
ruling Tuesday unless progress was made. Reports that the talks were
unlikely to succeed before a ruling could hurt Microsoft's stock today,
analysts said. Last week, shares soared on reports that negotiations
had picked up. Microsoft's stock closed Friday at $111.69 a share
on the Nasdaq Stock Market.
The talks have been influenced by the perceived failure of a 1995
consent decree to rein in Microsoft's anti-competitive business
practices and what the government attorneys have described as
Microsoft's repeated and flagrant antitrust violations. Microsoft has
denied that it breached the spirit or the intent of the decree.
Government negotiators seem particularly leery that Microsoft's
detailed proposal submitted last week was loaded with loopholes and
hidden escape clauses meant to neuter any deal, sources said.
``The (government) antitrust people think that Microsoft has been
ruthless and endlessly predatory and (Microsoft officials) don't see
themselves that way,' said Robert Bork, a former U.S. District Court
of Appeals judge and an antitrust scholar who has backed the
government's suit against Microsoft. Bork said Microsoft officials
``are going to be unwilling to give up much. Settlement is probably
unlikely.'
Robert Litan, who negotiated the 1995 consent decree while at the
Justice Department, said Jackson's findings show Microsoft ratcheted
up its monopolistic conduct after the 1995 decree. That's why the
Justice Department is playing tough. ``All that history just reinforces
the caution Justice has about not wanting to get burned again,' he
said.
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