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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: djia101362 who wrote (34744)	11/24/1999 5:49:00 AM
From: djia101362	Read Replies (1) \| Respond to of 74651

DOJ vs. Microsoft Settlement Is Likely (11/23/99, 2:58 p.m. ET) By Mary Mosquera, TechWeb Settlement in the Microsoft antitrust case is more likely now, but will not include a break-up of the software giant, attorneys tracking the trial said Tuesday. The appointment of a federal mediator has improved the odds of a settlement to 50-50, said William Kovacic, a professor at George Washington University Law School. "The process to design a solution and move to the middle ground is still going to be extraordinarily difficult," Kovacic said. Two settlement possibilities have cropped up that would let both parties save face: conduct controls backed up by aggressive performance conditions or declare Windows an essential facility and release the source code. U.S. District Judge Thomas Penfield Jackson appointed a mediator Friday to prod the parties to the negotiating table. Jackson said he was appointing federal judge Richard Posner, the chief judge of the U.S. Court of Appeals in Chicago. The DOJ and 19 states charged the Redmond, Wash., software titan in May 1998 with abusing its operating system monopoly to extend its dominance in browsers, crushing its rival Netscape, which America Online bought during the trial. Jackson found on Nov. 5 that Microsoft is a durable monopoly and abused its dominance. The government's incentive to resolve this is in setting the precedent that antitrust law applies to cyberspace. Microsoft does not want to create a binding structural precedent, but wants to get on about its business, said Stuart Gerson, an attorney at Epstein, Becker & Green in Washington, D.C., and a former U.S. assistant and acting attorney general. Posner can show DOJ and Microsoft there is risk for both sides in the appellate process. With a settlement, the government could keep some of its gains and Microsoft would probably get a better deal than going forward, even in a Republican administration if the party wins in the 2000 elections, Gerson said. The elections in November 2000 may play a part in crafting a solution. Democratic and Republican candidates are feverishly courting the high-tech industry. "The riskier the solution in terms of disruptive effect, the less attractive it will be to political decision-makers," Kovacic said. Posner is known as a conservative judge, steeped in economics, from the Chicago school of antitrust law, which is skeptical of government intervention and, therefore, less sympathetic to the government's position. "Given his voluminous antagonism to government regulation, it is not likely that Judge Posner will nudge his sparring parties toward conduct changes by Microsoft that need regulatory oversight," said consumer activist Ralph Nader. "He would probably prefer someself-executing remedies upon Microsoft that would presumably unleash competitors against the giant software company's anti-competitive monopolies." "I think the one basis on which the parties could settle and save face is an agreement to declare Windows an essential facility and open up the code," Gerson said. "If properly presented, given Microsoft's resistance to it so far, it is possible -- not probable, not likely -- to strike a deal on that basis and market it so it will be acceptable." Some measure that would promote compatibility across systems and reduce the applications barrier to entry would seem to be a component of any solution, Kovacic said. The minimum Microsoft can put on the table is controls to limit its ability to pressure PC makers and Internet providers, a protective zone around those groups so they can pick and choose, he said. The government can ask for substantial penalties for violating the order. "They could negotiate the transfer of a hostage that the government could execute if Microsoft breaches its performance commitment," Kovacic said.