THREAD ---Great article ---Love the last line from our friends in congress : Microsoft Corp.
The Wall Street Journal -- June 25, 1999
Microsoft and Justice Department Met
Three Weeks Ago to Seek Way to Settle
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By John R. Wilke
Staff Reporter of The Wall Street Journal
WASHINGTON -- Even as both sides in the Microsoft Corp. antitrust trial bashed each other in
court, they met secretly to search for a way to settle the suit, people close to the case said.
The meeting took place at the Justice Department three weeks ago between William Neukom,
Microsoft's general counsel; Joel Klein, the Justice Department's antitrust chief; and senior state
officials, these people said. It was their first face-toface meeting since an unsuccessful round of talks
in March.
The meeting, during the first week of rebuttal testimony, didn't produce a breakthrough. But "the
dialogue is going to continue," one insider said, and the sides agreed to meet again. However, no
meeting date was set, and some participants think any talks won't get serious until the fall, when an
initial ruling by U.S. District Judge Thomas Penfield Jackson is expected.
After 76 days, testimony in the historic trial ended yesterday with Microsoft's final witness, Richard
Schmalensee, facing off against U.S. trial counsel David Boies. In court, the two sides sketched
starkly different futures for the industry -- one of vibrant competition, transforming the economy with
electronic commerce, and another in which the software giant has a chokehold on Internet access
with its software monopoly.
"This is a serious competitive problem that merits a serious solution," Mr. Klein said on the
courthouse steps. He accused Microsoft of using "every trick in the monopolist's book" including
predatory collusion, intimidation and threats.
In court yesterday, Microsoft produced more evidence that the industry is changing rapidly and
cited America Online Inc., among others, as a strong competitor. A Microsoft spokesman said the
government produced "no evidence of consumer harm" and that Microsoft's actions resulted in
better products and lower prices.
One reason for any renewed settlement effort may have to do with how Judge Jackson structured
the endgame in the trial: He has said he will issue an initial finding on the facts, before a final ruling. If
that first ruling goes against Microsoft, it will have a strong incentive to settle before a final judgment.
In settlement talks so far, Microsoft has said it is willing to accept new restrictions on its business
practices. But the government has countered that Microsoft must go further and says the evidence
of Microsoft's monopoly that has come out in the five-month trial demands a sweeping and airtight
remedy.
One new Microsoft proposal is a Windows "ballot screen" that would appear on new computers to
let the buyer decide which Internet browser to use, people familiar with the approach said.
Currently, Microsoft's Explorer browser comes as part of Windows, depriving consumers of that
choice; it is the issue that triggered the lawsuit a year ago.
Under Microsoft's proposal, a user could choose between Explorer or its chief rival, Netscape
Navigator from AOL, and a third, lesser-known Internet browser called Opera. If a non-Microsoft
product is picked, Explorer wouldn't appear on the Windows "desktop" screen or its "start" menu.
The approach parallels a suggestion made by Judge Jackson in a meeting with the lawyers in his
chambers in late March. The judge's idea suggests he may be leaning toward ruling against
Microsoft -- but may also be reluctant to impose a harsh remedy, such as a breakup.
If it wins the case, the government hasn't decided whether to seek "structural" remedies, like
divestiture or breakup, or "conduct" remedies, such as the ones Microsoft has tentatively put on the
table. After what's come out at trial, some U.S. and state officials argue for a tough remedy that
doesn't require continual monitoring; there is also enormous distrust between the two sides, and any
agreement could unravel when it comes to written terms.
Microsoft has already put several possible settlement terms on the table, people close to the case
said. They include an end to exclusive contracts with Internet partners, greater disclosure of
Windows' inner workings and more freedom for PC makers to add rival software or online
services. But Microsoft hasn't offered to end discriminatory pricing among PC makers, as the
government will seek.
One of the toughest elements to negotiate is likely to be the disclosure of Windows' interfaces, or
how the operating system meshes with applications software -- a move intended to protect rivals
whose software must be compatible with Windows. These interfaces, known as APIs, are the
levers of power in the software industry. In a previously undisclosed document entered into
evidence in a pending private antitrust suit, a Microsoft manager notes their importance.
"Microsoft learned long ago that controlling the APIs means controlling the industry," the e-mail
says. Microsoft insists it already discloses APIs.
Even as it seeks a settlement, Microsoft is rallying support for its cause on Capitol Hill, where it has
also opened its wallet wide with campaign contributions. This week, House Republican leaders
unveiled the "eContract," a package of legislative initiatives modeled after the 1994 Contract With
America.
Part of it appears aimed at the Microsoft case. In a section titled "reining in reckless federal
agencies," it warns against "allowing antitrust law to become an excuse for bureaucratic interference
with innovation and competition."
---
Keith Perine contributed to this article.
---
Final Steps
What's next in the Microsoft antitrust case:
August 10:
Proposed findings of fact are due; responses and revisions permitted on Sept.
10. September 21: Closing arguments. Judge Jackson likely will rule on findings of fact before year's
end. After this, pressure on either side to settle rises sharply. Proposed conclusions of law are due
from each side 30 days after Judge Jackson's ruling on the facts. Next year: Final ruling expected,
unless case is settled before. After that, either side may appeal.
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