The U.S. Department of Justice and as many as 20 states are ready to pull the trigger today with broad antitrust cases against Microsoft, sources close to the investigations said Wednesday.
"This is what happened to IBM 30 years ago, and that is what led to growth of companies like Microsoft," said a source close to a state investigation, who requested anonymity.
The state source noted that while investigators plan to file the suit on Thursday, last-minute developments could push that to Friday. The source said that talks with Microsoft about a possible settlement had not been fruitful; Microsoft spokesman Mark Murray would not comment on "ongoing talks" with government officials.
Because the filings would come only one day before Microsoft is scheduled to ship its "gold code" of Windows 98 to PC makers, legal officials won't try to block that move, a source in one of the states said.
However, the source said, the states will seek to block the June 25 general release of Windows 98 unless Microsoft agrees to make changes to the operating system and to its contracts with OEMs.
According to the source, the states will ask a federal court to require Microsoft to offer a version of Windows 98 that does not include the Internet Explorer browser.
The operating system's Windows-Explorer integration is one of Microsoft's key selling points. The states also will seek to force Microsoft to stop requiring that the company's logo be displayed first when a Windows PC is booted.
The states will ask the court to make Microsoft revamp its licensing agreements with ISP's that force them to promote Explorer to the exclusion of competing browsers. Microsoft made such changes earlier this year, although it insisted the practice was legal.
State investigators, who have held daily teleconferences for two weeks and circulated a draft lawsuit the last couple of days, will reach beyond Windows 98 and Explorer.
For example, they will argue that Microsoft's Office volume licensing practices are predatory and exclusionary because the company offers computer companies discount rates if they license the desktop applications suite for several different lines of computers, sources said.
"We want them to relax restrictions they place on OEMs that lead to the OEMs having to offer Microsoft roadmaps everywhere," the state source said.
Government officials also will argue that Microsoft has co-opted Sun's Java programming language by developing a version specifically designed for Windows.
As of Wednesday afternoon, 19 states were ready to file the suit, a number that could grow. On Tuesday, Texas bowed out of any immediate action.
The state source said the Justice Department would file a new case based on the Sherman Antitrust Act. Department of Justice representatives did not immediately return calls seeking comment.
Microsoft officials would not comment on potential new suits from the Justice Department or the states. "We've had no indication from either the [Department of Justice] or the states," Microsoft's Murray said Wednesday afternoon.
