Microsoft denies that settlement is imminent

Rumor says Microsoft will settle to prevent a breakup, but the company denies the scuttlebutt.

By Nancy Weil
IDG News Service, 03/24/00

Microsoft is vehemently denying reports that a settlement is likely in its federal antitrust cases. A company spokesperson denounced published reports, based on anonymous sources said to be close to negotiations, that the software maker and the U.S. government are closer to reaching a settlement in the ongoing case.

The Wall Street Journal and the Washington Post published similar reports on Thursday, citing anonymous sources saying essentially the same thing: The two sides are moving closer to an agreement that could restrict how Microsoft does business but that would not break up the company.

"When the reports say, 'sources close to the case,' then unfortunately the sources don't have to stand behind what they say," says Jim Cullinan, the Microsoft spokesperson.

"It's not Microsoft," Cullinan says regarding the source of the anonymous information. He adds that "Microsoft has been very consistent" in having its legal team not share details of the negotiation process, which is being conducted through a court-appointed mediator.

A spokesperson for the Department of Justice, which is pursuing the antitrust action on behalf of the U.S. and 19 states, declined comment on the mediation discussions.

Looking for an Agreement?

Microsoft and the Department of Justice are in talks mediated by Richard Posner, chief judge of the 7th Circuit U.S. Court of Appeals in Chicago. The government reportedly has pushed to break Microsoft into several smaller companies. Microsoft officials have said they oppose that remedy.

U.S. District Judge Thomas Penfield Jackson, who is hearing the antitrust case, urged the parties to try to work out a settlement. He is said to be close to issuing his final ruling. Jackson ruled last November in findings of fact that Microsoft is a monopoly and has used that power to squelch competition and extend its reach into the Internet browser market.

The government also charges that Microsoft engaged in anticompetitive business practices in violation of U.S. antitrust law. Although Jackson agrees that Microsoft is a monopoly and has abused that power, he has not yet ruled on whether Microsoft is violating antitrust law. It is not illegal in the U.S. for a company to be a monopoly; what is illegal is using monopoly power to stomp the competition.

A settlement before Jackson issues his final ruling would ostensibly end the federal case, although Microsoft faces dozens of civil cases that were filed following the judge's findings of fact. Also, Jackson must approve any settlement.

The recent reports of a settlement suggested that a likely arrangement would avoid breaking up Microsoft. But The Post article also notes dissension in "the government camp" about whether mediation talks can produce a settlement that fixes the damage the government contends Microsoft has done. The Journal says some on the plaintiff side suspect that recent overtures by Microsoft are meant to make the company seem as if it has acted reasonably.