To: drmorgan who wrote (15372 ) 5/17/1998 9:49:00 AM From: Moonray Read Replies (1) | Respond to of 22053
Microsoft Talks Break Down; Lawsuits Likely Monday Washington, May 16 (Bloomberg) -- Microsoft Corp. and government antitrust enforcers broke off settlement talks with no agreement, clearing the way for the U.S. Justice Department and 20 states to file lawsuits Monday challenging the software giant's business practices. Microsoft, the world's No. 1 maker of computer software, said it wouldn't accede to the Justice Department's insistence that it change the way it integrates its Internet Explorer browser into Windows 98, which is to be shipped Monday to personal computer makers. ''The government demands went too far with no basis in law and, most important, were not in the best interests of customers,'' said Microsoft Chairman Bill Gates in a statement. One sticking point, according to the company, was the government's demand that Windows 98 incorporate rival Netscape Communication Corp.'s Navigator browser. The Justice Department issued a brief statement saying only: ''The discussions between the Department of Justice, a coalition of state attorneys general and Microsoft ended today without resolution. At this point they are not expected to resume.'' Barring last-minute developments, the end of the talks means the Justice Department and states will go to federal court Monday alleging that the Redmond, Washington-based software maker abuses its market dominance to stifle competition in the software industry. Windows Ships Monday The states and federal government had held off going to court Thursday to see if they and the company could reach a settlement by Monday. Also, Microsoft had postponed until Monday its plans to ship Windows 98, the newest version of its basic software program that enables PCs to function, a delay of three days. The company said it would start the shipments Monday as planned. Computers operated by Windows 98 are to be available to consumers on June 25. The settlement discussions began Friday, but lasted just a day and a half before they broke off at midday today, the Justice Department said. Talks snagged as early as Friday afternoon when one key negotiator, Connecticut Attorney General Richard Blumenthal, went home. Reached in Connecticut early today, Blumenthal declined comment. Microsoft spokesman Jim Cullinan rejected any suggestion that the company wasn't serious about trying to reach a settlement. Microsoft's legal team ''flew 3,000 miles to negotiate over 7 1/2 hours on Friday alone,'' he said. ''That shows our eagerness to negotiate.'' Nor did Gates change his mind about negotiations after earlier indications to chief Justice Department antitrust official Joel Klein of a willingness to negotiate, Cullinan said. ''The chairman mentioned that he was interested in negotiating and indicated every effort would be made to avoid litigation,'' he said. ''Negotiations are a fluid process,'' he said. ''There have been several issues on and off the table, offers and counteroffers. What they're looking for is unreasonable.'' Sticking Points Among the sticking points in the talks was the government's demand that the company ship Windows 98 with the entire computer code for Netscape's Navigator Internet browser, Cullinan said. This would make it easier for computer users to search the Internet with Netscape Navigator rather than Microsoft's browser. Netscape officials weren't immediately available for comment. The discussions also focused on the government's request that Microsoft hide the Internet Explorer icon as well as other ways of accessing the browser when a user is in other applications, such as word processing. The company said that would make it hard for consumers to use the web-browsing functions. Another point of contention was Microsoft's control of the screen a user sees when the computer is turned on. Currently, a logo for the Windows operating systems is displayed, and Microsoft said the government demanded that it give up its right to display that logo. And regulators raised concerns about Microsoft's promotion of its own browser in its contracts with Internet service providers to the exclusion of rival browsers. ''We're working to make Windows 98 work well with the Internet, but the government believes that is illegal,'' Cullinan said. ''In America, every company must be free to innovate and build better products for consumers. That is a principle worth standing up for.'' Looking for a Compromise Microsoft had said it wanted the talks to succeed to avert a lawsuit it said would hurt the company, consumers and the software industry. The Justice Department entered into the discussions because it was eager to avoid a costly battle that could take years to fight in court, particularly because of its poor track record in recent decades, said William Kovacic, an antitrust law professor at George Mason University. Still, Klein is under pressure to obtain terms from Microsoft that will satisfy Microsoft competitors who were critical of a 1994 consent decree the Justice Department had negotiated with the company. ''There are a lot of people with their noses up against the window and looking in, and they are going to scream bloody murder if they don't come back with something substantial,'' Kovacic said before the talks broke off. Hiding Icon At issue in the overall case against Microsoft are government concerns that the company is using its dominance of the operating system market to crowd out competition from other software applications and Internet browsers, notably Netscape Navigator. The Justice Department has contended that Microsoft illegally integrated its Internet Explorer into Windows 95 to leverage control of the browser market. Microsoft is appealing a judge's order that it offer PC makers a version of Windows 95 without the functioning browser. Similar concerns are being raised over Windows 98, which has much more highly integrated Internet browser function than the previous product. The company argues it has the right to place whatever functions it wants into the operating software to deliver product innovation to consumers. One manufacturer said Monday shipments of Windows 98 should provide enough time to install the system in short order. ''As long as it ships on Monday and there's no court or legal action (to block it), we'll get the product out on time,'' said Bill Hughes, spokesman for International Business Machines Corp. IBM and other PC makers have been testing early versions of Windows 98, but need a few weeks to test the final version to be sure there are no problems before the June 25 release date. o~~~ O