Microsoft antitrust proposals continue into eleventh hour

It was a topsy-turvy weekend for software giant Microsoft Corporation, which presented a series of last-minute proposals to the U.S. government in a bid to win a settlement and escape what is expected to be a lopsided defeat at the hands of Judge Jackson. Jackson, who is expected to issue his conclusions of law--where he will spell out which laws the company actually broke in its bid to continue and extend its Windows monopoly--issued an ultimatum to Microsoft and its rivals at the U.S. Department of Justice (DOJ), stating that time for a settlement was running out. Microsoft immediately retreated from its tough stance and issued what was described as an "eleventh hour" settlement proposal Friday; the DOJ soundly rejected that proposal over the weekend. But the soap opera that is the Microsoft antitrust trial will continue down to the wire: On Monday, the company piled more concessions onto the proposal, hoping to avert a legal and public relations nightmare.

With the deadline approaching, government sources revealed that the DOJ wouldn't seek a breakup of Microsoft if the company offered some realistic and far-reaching settlement concessions. So Microsoft faxed off a proposal Friday that it hoped would end the government's lawsuit, which alleges that the company has violated federal antitrust laws by harming competitors, partners, and consumers with its Windows monopoly. While news reports suggested that high-level face-to-face meetings between the two sides might occur because of the proposal, it never happened: Though both sides were predictably tight-lipped about a possible settlement, early indications suggested that Microsoft hadn't gone far enough to bring the DOJ to the table for talks.

"We are not going to comment on anything related to potential mediation efforts," said Microsoft spokesperson Mark Murray. "We believe it's important for any mediation efforts to proceed in a confidential manner." The DOJ concurred, offering "no comment about the mediation process."

According to sources, Microsoft had agreed to allow the government to monitor its Windows-related business practices, but was unwilling to set limits on what could be integrated in Windows. This point is key to the case: Microsoft argues that the bundling of Internet Explorer with Windows is legally and technically defensible, but the government is arguing that the product tying illegally destroyed competition in the Web browser market. However, other news sources have reported that Microsoft actually agreed to remove Internet Explorer from Windows, perhaps making it an optional component during installation.

Whatever the concessions were, the proposal didn't go far enough for the government: On Saturday, sources close to the case were reporting that the DOJ had rejected Microsoft's settlement offer, which was described as "inadequate." This seemed to remove any hope of a settlement before Jackson's conclusions, which are expected to particularly harsh. Of course, Microsoft has said that it will appeal any adverse ruling.

But on Monday, hopes for a settlement were renewed once again when Microsoft reportedly issued a second round of concessions where the company agreed to ship competitor's product in Windows and even allow competitors to access the source code of Windows, where necessary, to better integrate their products into the popular OS. And, sources, said, the company is offering to sell a version of Windows that doesn't include Internet Explorer.

Whether this will be enough to sway the government remains to be seen. Otherwise, judgment day arrives on Tuesday, when the Microsoft antitrust trial will swing into a new phase that promises to end after years of appeal

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