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Friday November 2, 2:08 AM

Microsoft deal in antitrust case may lift cloud

A deal between Microsoft and the US Justice Department in their antitrust case, if finalized, could help the company and the technology industry by lifting the cloud from over the world's biggest software firm, analysts say.

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 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 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 ... (the opinion doesn't say Microsoft should give out its source code, it doesn't say Microsoft cannot include other things in the operating system."

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."

Merrill Lynch analyst Henry Blodget said that while a settlement would be a positive for Microsoft, "it would be premature to conclude that the company's legal issues are behind it."

Blodget points out that the 18 states in the case -- each of them co-plaintiffs -- could yet prove a thorn in Microsoft's side. Reports claim the states are reluctant to lend support to the deal.

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 rely on computer makers to offer diversity.

"The challenge posed by the proposed remedy is not merely 'wordsmithing' as reported in the press," he said.

"It's about a framework that is ineffective and inconsistent with the law. It does nothing to promote competition and innovation despite years of documentation to the contrary."

If settlement talks fail, US District Court Judge Colleen Kollar-Kotelly will have to decide how to penalize Microsoft's for its anti-trust violations. The judge has set a Friday deadline for mediated talks.

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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