Deal in Microsoft antitrust case uncertain

A settlement in the antitrust case pitting the US Justice Department against Microsoft hung in the balance amid reports that 18 states involved in the case wanted more time to review the deal.

The parties were expected to present a deal to US District Court Judge Colleen Kollar-Kotelly on Friday, and US Attorney General John Ashcroft was slated to announce news of the settlement in a press conference.

But the Wall Street Journal reported late Thursday that the 18 states that are co-plaintiffs in the government's case against the software giant have asked for more time to consider the draft settlement.

Their attorney would ask the judge for more time to file the states' response, with a deadline expected sometime next week, the report said, quoting a source familiar with the negotiations.

State officials could not be reached for comment on the report. Kollar-Kotelly had set Friday as the deadline for mediated talks.

Approval of the deal by the states is necessary for the case to be resolved. If they refuse, the case, first launched in 1998, could go back to court.

The Justice Department said late Thursday that Ashcroft would hold a press conference at 10:00 am Friday (1500 GMT) on an "antitrust matter", without giving further detail.

Published reports said Thursday that a tentative agreement would not require Microsoft to disclose key technical data or redesign its Windows software, but would give computer makers more power to manage their desktop displays.

Government and company officials declined to comment on the reports, but analysts said it could lift the cloud from over the world's biggest software firm, giving a boost to both Microsoft and the entire technology industry.

Nicholas Economides, an antitrust expert at New York University, said the reports indicate "a good settlement because it deals with the problems in the way that the court of appeals envisaged."

A US appeals court in June upheld a lower court finding that Microsoft acted as an illegal monopoly but overturned an order that the company should be broken up. The appellate judges also ordered that a new judge be named.

On September 6, the US government abandoned its demand for a breakup of the software titan, saying it was hoping to speed up a resolution of the case.

Economides said the reports indicate that the settlement would include "specific ways to ensure that Microsoft does not abuse its monopoly position," reflecting the more limited scope of the appeals court decision.

"The remedy has to be based on (the appeals court ruling)," he added. "It should not punish Microsoft for things it was not found guilty of."

Economides added that the settlement "would also have a good effect on the rest of the industry by removing the uncertainty that the antitrust case has created."

But some Microsoft critics said the settlement would be too soft on Microsoft and called on the government to reject it.

Ken Wasch, president of the Software and Information Industry Association, said the settlement "stunningly, will not change either Microsoft's business practices nor its software implementations one iota," and will rely on computer makers to offer diversity.

Robert Lande, a law professor at the University of Maryland, said: "It looks like the DOJ has capitulated... it will be a complete victory for Microsoft. Even if the states don't go along, it's still a major, major victory for Microsoft."

Despite its antitrust woes, Microsoft launched the newest incarnation of its Windows operating system, Windows XP, on October 25 in a splashy New York kickoff.

The stricken computer industry is hoping that XP -- with its built-in capabilities to edit digital photos and videos, conduct online meetings and play and record CDs -- will provide a spark to ignite cooling sales.

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