Reports: Microsoft, DOJ near a settlement

Microsoft has reached a tentative settlement agreement with the US Department of Justice (DOJ) in the landmark antitrust battle, and the two sides might announce a plan that could bring the long-fought lawsuit to a conclusion this week.

Microsoft has reached a tentative settlement agreement with the US Department of Justice (DOJ) in the landmark antitrust battle, and the two sides might announce a plan that could bring the long-fought lawsuit to a conclusion this week, according to published reports.

Both sides hope to reach a settlement by Friday (US time), the same day as the court-imposed settlement deadline, the reports say. However, the wording of the agreement has not been finalised and talks could still break down before a settlement is announced, the Washington Post reported, citing unnamed sources who had been briefed on the talks.

The proposed deal would require Microsoft to give computer makers more flexibility to determine how software applications are displayed on Windows-based computers, according to reports in the Washington Post and The Wall Street Journal. Both newspapers cited details in their articles from a drafted settlement offer. The agreement would also set rules for how much of the Windows operating system source code Microsoft would have to share with other software firms, and order the creation of a technical committee to oversee the implementation of the proposed stipulations, the papers report.

The settlement would expire after five years and would be extended by two years if Microsoft was found to have violated the agreement, the Post says.

State attorneys general, who have taken a harder line against a settlement than DOJ officials, reportedly reviewed the proposed agreement on Wednesday. Their acceptance of a settlement agreement with Microsoft would remove one of the largest obstacles to ending the antitrust suit. But the likelihood of the states going along with any tentative deal between Microsoft and the DOJ is questionable, observers say.

Two of the states suing Microsoft -- New York and California -- have said they would pursue their own litigation against the software maker if they were not satisfied with the settlement struck by the DOJ. The attorneys general from New York and California took the tough stance after the DOJ announced in September that it would not pursue a breakup of Microsoft, a remedy it had previously pressed in court.

Last week, the states backed that pledge when they hired Brendan Sullivan, a high-stakes attorney who defended Oliver North in the Iran-Contra trial, to represent them in the case. The states had been without their own trial attorney prior to last week. The appointment of Sullivan suggests that the states could pursue their own case if the DOJ settles.

"The big question is what are the states going to do," says Ernest Gellhorn, a law professor who has closely followed the antitrust case and who teaches at George Mason University in Fairfax, Virginia.

Microsoft officials have been tight-lipped about the progress of the settlement discussions, while noting that they are proceeding wholeheartedly. "We're working hard to get a fair and expeditious settlement with the government," Microsoft chief financial officer John Connors said last week while speaking to reporters following the official launch of Windows XP.

Echoing Connors, Microsoft legal spokesman Jim Desler said this week that the company is pushing hard to reach an out-of-court settlement. "We're working hard with the assistance of the mediator to see if we can resolve these issues," he said. "Certainly we think a settlement is in the best interest of the industry and the economy."

As the legal bout inches toward a conclusion, pressure against Microsoft and its business practices has also eased on Capitol Hill, where US senators pledged in early September to investigate the software maker.

The Senate Judiciary Committee was scheduled to begin an investigation into Windows XP and other competitive issues involving Microsoft's Internet products and services in early September. Following the September 11 terror attacks on the US, the committee buried the issue under a slew of new legislation to combat terrorism.

"Clearly the Senate is dealing with very important issues related to the September 11 tragedy and aftermath of that," Desler said. "It's understandable how their agenda has changed."

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