NEWSFLASH: Microsoft Reaches Tentative Settlement with Government

According to government sources and various news agencies, Microsoft has reached a tentative settlement in its historic antitrust case with the US government. Details of the deal aren't available, but sources say that Microsoft has agreed to some key concessions, including offering versions of Windows that don't include any bundled products and opening the source code to its Internet Explorer (IE) Web browser. However, several unanswered questions could stall the settlement: The exact language of the deal hasn't been finalized, and the US states that are allied with the government haven't yet given their OK. But news that the two major factions in the case have agreed, at least tentatively, is unexpected--to say the least.

According to sources, Charles James, the assistant U.S. attorney for antitrust, presented the tentative agreement to the state attorneys general last night, just 2 days before the court-ordered final day of mediation. If Microsoft had failed to reach a settlement by Friday, the company would have faced US District Judge Colleen Kollar-Kotelly in court this spring. Kollar-Kotelly had already warned Microsoft that such proceedings would be damaging to the company.

According to sources close to the case, Microsoft has agreed to several key concessions. For example, the company can add new features to Windows but will have to offer a version of Windows--for a lower price--that excludes those new features. Microsoft won't be allowed to enter into restrictive contracts with PC makers that force those companies to buy only those versions of Windows that include new features, but the company will be able to grant financial incentives to PC makers to make the newer versions more appealing. Microsoft will also agree to share technical information about Windows with partners and competitors so that other companies can more easily build applications and services that interact with Windows; this information will be shared in a "secure facility" where programmers working for other companies can examine the Windows source code. And Microsoft has reportedly agreed to open the source code to IE, but not to Windows.

Microsoft and the US Department of Justice (DOJ) have elected not to comment about a potential settlement. "We're working hard to achieve a settlement and believe settlement would be in the best interest of consumers and the economy, but will not comment on any aspect of these confidential discussions," a Microsoft spokesperson said late yesterday.

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